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Courtesy of Daniel Sckolnik, ETF Periscope
“Why, sometimes I’ve believed as many as six impossible things before breakfast.” — Lewis Carroll
Impressive. While socio-economic upheaval on an arguably historic scale continues to unfold in the Middle East at nothing less than warp speed, the markets appear to be in a state of Bullish fog. While denial may not be a rather large river in Egypt, it is certainly a hat that investors are wearing at a ridiculously jaunty angle on Wall Street.
Consider: The Dow Jones Industrial Average (DJIA) ended the week at 12,391, up over 13% in a mere 11 weeks, dating back to the first of December when it became clear that the Dow had clearly decided that 11,000 would serve as a solid support level for the next phase of the current “compressed” Bull run. During this time, the Dow has been either flat or up at an astounding 3:1 ratio. That’s hotter than Cairo’s streets after tank exhaust has blasted off the pavement. Even more impressive, in a certain cock-sure kind of way, is the fact that since January 28th, when the markets shuddered at the news that trouble in Egypt was developing fast and deep, the Dow has dropped a grand total of two times.
That’s right. Twice.
This in spite of the fact that the Egypt government was toppled, and neighboring countries including Bahrain, Iran and Yemen all experienced different levels of unrest. The whiff of change has also permeated Libya, and even the relatively low-key country of Morocco has seen thousands of marchers gather in city centers.
You would think that, at the very least, with oil-rich countries like Egypt and Libya feeling the heat of instability, the price of oil would be skyrocketing. Instead, light, sweet crude for March delivery finished down $0.16, or 0.2%, at $86.20 a barrel as of Friday. Go figure.
The case has been made by various economists and market pundits that the equity markets have been benefiting from a steady influx of funds that have pulled out of the bond markets. Risk is considered worth taking at the moment, apparently, and that sentiment might be at the heart of what is powering the Bulls to the somewhat parabolic race up the price charts.
But there is always a point when the risk reaches a level of saturation, at least in terms of perception. The markets will correct themselves, as is the nature of the beast. The question might be asked, is there a specific action on the geo-political field that will trigger the correction? Time will tell, and at the current rate of speed that events are unfolding, that clock might chime pretty loud and pretty soon.
In the meantime, there continues to be a strong trend to ride, if you happen to have the brass to continue along that path. And if you do, here are a few ETFs that stand atop Sabrient’s SecttorCast Rankings, and, with strong fundamentals and attractive technical elements, can be considered to be strong investment or trading candidates.
PWP (PowerShares Dynamic Mid Cap Value Virtual Portfolio Fund) is based on the Dynamic Mid Cap Value Intellidex Index. The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index. The Index is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure. The Fund seeks investment results that correspond generally to the price and yield (before the fund’s fees and expenses) of the target index.
IYW (iShares Dow Jones U.S. Technology Sector Index Fund) is a non-diversified exchange-traded fund that seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the technology sector of the U.S. equity market, as represented by the Dow Jones U.S. Technology Index. The fund seeks to invest in large-cap technology stocks with market capitalizations in range of the Dow Jones U.S. Technology Index. IYW was formed on May 15, 2000 and is domiciled in the United States.
IYH (iShares Dow Jones U.S. Healthcare Sector Index Fund) is a non-diversified exchange-traded fund that seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S. healthcare stocks as represented by the Dow Jones U.S. Healthcare Index. Component companies include health care providers, biotechnology companies and manufacturers of medical supplies, advanced medical devices and pharmaceuticals. The Fund uses a representative sampling strategy to try to track the Index.
ETF Periscope
Full disclosure: The author does not personally hold any of the ETFs mentioned in this week’s “What the Periscope Sees.”
Disclaimer: This newsletter is published solely for informational purposes and is not to be construed as advice or a recommendation to specific individuals. Individuals should take into account their personal financial circumstances in acting on any rankings or stock selections provided by Sabrient. Sabrient makes no representations that the techniques used in its rankings or selections will result in or guarantee profits in trading. Trading involves risk, including possible loss of principal and other losses, and past performance is no indication of future results.
