These 3 Sectors Buck Sell-Off; High-Octane Play Near Buy Point?

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U.S. stocks followed European markets lower Thursday as the tech-heavy Nasdaq composite led the decline.

[ibd-display-video id=2411914 width=50 float=left autostart=true]PowerShares QQQ Trust ( QQQ ) lost 0.6%, SPDR S&P 500 fell 0.4% and SPDR Dow Jones Industrial AverageDIA gave up 0.2%.

The biggest losers among sector plays in the stock market today included telecom, semiconductor and industrials. Among the few sectors bucking the sell-off were oil, retail and homebuilders.

SPDR S&P Oil & Gas Exploration & Production ( XOP ) and VanEck Vectors Oil Services ( OIH ) rose 1% and 0.5%, respectively. United States Oil ( USO ) and PowerShares DB Oil ( DBO ) gained about 1% each.

West Texas intermediate crude prices were up 0.7% at $57.23 a barrel. Most gold funds were slightly higher along with gold futures.

Finding Support?

Ever wished you'd bought shares of highflying biotechs such as Bluebird Bio (BLUE) and Exact Sciences (EXAS), which have scored triple-digit gains this year?

While both are extended well out of buy range now, there may still be a way to invest in those names. A high octane small-cap exchange traded fund holding both biotechs is finding support at the 50-day moving average , marking a potential buy signal. Early Friday, it was again testing the 50-day line as the stock market fell.

ProShares Ultra Russell 2000 (UWM) slipped below its 50-day line Wednesday before reversing higher to close with a gain. Shares had trended lower the past month, after advancing 9% from a breakout past a 63.51 cup-base buy point . The ETF tends to form a series of bases as it cuts below and above the support line.

The $190.2 million fund, which aims to provide two times the daily performance of the Russell 2000 Index, will mark its 11th anniversary in January. It's a leveraged ETF, so it's designed to outperform the small-cap index on the way up. But keep in mind its losses on the way down can also be much steeper than the underlying index. This fund is more suited for trading than buy and hold investing.

The top sector weightings as of Oct. 31 were technology, at 22%, financial services 17%, health care 14%, and nearly 11% each in consumer cyclical and industrials, according to Morningstar Direct. Its biggest long equity positions included biotechs Exact Sciences and Bluebird Bio, and Grubhub (GRUB).

IBD'S TAKE:On the lookout for ETF ideas that may be worth a closer look? Check out IBD's weekly ETF Leaders column for a featured fund and a list of highly rated ETFs.

UWM's year-to-date gain of 18.1% is slightly ahead of the S&P 500's 17.6% return, though its one-year return of 52.6% trounced the broader index's 24%. The ETF's average annual returns of 15.5% and 10.7% over the past three and five years, respectively, are well ahead of the S&P 500's 10.7% and 15.6% gains for the same periods. UWM's 10-year return is 7.7%, vs. the S&P 500's 8.1%.

Leveraged funds' expense ratios tend to be higher than their nonleveraged counterparts. UWM fund carries a 0.95% expense ratio.

Wednesday's pick, iShares Russell 2000 (IWM), also found support at its 50-day line. That puts it in a potential buy zone.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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