SET Portfolio Update April 2011

April 5, 2011

Dear Sector ETF Trader Reader,

The bulls are off and running… And that’s great news for ETFs!

You can feel the bullish momentum building as we head into first quarter earnings season. It’s simply amazing to see such a resilient stock market.

In the last few months, we’ve dealt with headwinds that would have sent a weaker market down 15% to 20% without breaking a sweat.  It’s really mindboggling to think about how much this market has dealt with.

First off, skyrocketing food and energy prices led to political unrest and oil supply disruptions in the Middle East and North Africa.

And then the biggest earthquake ever recorded hit Japan, followed by a massive tsunami, and a nuclear crisis to top it off!

Yet the S&P 500 only shed 7% through it all!  That’s a clear indication the bulls are in control of this market.

Now the S&P 500 is all the way back up near the February high.  And it looks like the large cap index is destined to reach a new bull market high in short order.

What’s more, the economic data is positive.  Employment, consumer sentiment, and business spending are all steadily improving.  And the leading economic indicators show the economy should be even stronger six months down the road.

Finally, the Fed continues to support the markets with QE2 and near 0% interest rates… There’s no reason to think the good times won’t keep on rolling.

Simply put, this is a bull market.  So, sit back and enjoy the ride.

I’ll have two new recommendations for you in the monthly issue so stay tuned…

Now for the updates…

Position Updates

. . . . Market Vectors Gold Miners (GDX) – Hold

GDX is off to a fast start. Our gold miner’s ETF is getting a boost from higher gold prices. It hit a peak gain of more than 8% in just a few weeks.  GDX is getting a boost from higher gold prices.  And the yellow metal is riding high on renewed inflation concerns.  From a technical perspective, GDX’s chart looks great.  It’s breaking out above a technical resistance level.  And looks like it will continue to follow the long term uptrend to new heights.  GDX is above our $58 buy up to price so I’m moving it to a hold.

. . . . PowerShares S&P SmallCap Technology Portfolio (PSCT) – Buy up to $33

PSCT was formerly known as XLKS.  PowerShares relented in their battle with State Street over the use of the XLKS ticker symbol.  The ETF is still the same but it’s now trading under the new ticker.  Moving onto more important matters… PSCT is looking great.  It’s bounced back from the market correction in February and March with a vengeance.  Now it’s on the verge of breaking out to a new all time high.  There’s still plenty of room for these underappreciated stocks to run.  Go ahead and buy PSCT up to $33 if you haven’t already.

. . . . iShares FTSE NAREIT Residential Plus Capped Index Fund (REZ) – Hold

REZ has shown relative strength to the market throughout the recent correction.  The residential REITs held onto their gains as the rest of the market was selling off.  That’s a good sign REZ should continue its uptrend.  We hit a new peak gain of nearly 8%.  And REZ should continue to rack up gains as REITs increase rents and profitability in the weeks and months ahead.  Continue holding REZ for further gains.

. . . . Market Vectors Global Alternative Energy (GEX) – Hold

GEX is on a roll right now.  Rising oil prices and the nuclear crisis in Japan have put alternative energy companies in the spotlight.  All of the attention from investors sent GEX soaring to peak gain of more than 7%.  GEX is in a solid uptrend and cutting through resistance levels like a hot knife through butter.  It’s now above our $22 buy up to price so I’m moving it to a hold.  Continue holding for further gains ahead.

. . . . iShares Dow Jones Industrials (IYJ) – Hold

IYJ is benefiting from an uptick in economic activity.  Our industrial ETF hit a new peak gain of more than 10% last week.  Not even rising energy prices can put a damper on this party.  The higher input costs are being offset by productivity gains.  And so far we haven’t heard any concerns that rising prices will pinch margins this quarter.  IYJ’s full steam ahead as the economic recovery gains momentum.  Continue holding for further gains.

. . . . Market Vectors Agribusiness (MOO) – Hold

MOO has been on a wild ride over the last few months.  It hit a peak gain of over 13% in February.  Then it sold off and dropped below our initial buy price in March.  Now MOO is almost back to the February highs.  Any way you slice it, those are some big swings… The good news is MOO should continue moving higher from here.  Agricultural commodities like corn, wheat, and soybeans are all near record highs.  And Agribusiness companies make a killing when commodity prices are high.  Continue holding MOO for further gains ahead.

. . . . First Trust ISE Global Platinum Index Fund (PLTM) – Hold

PLTM continues to be range bound between $30 and $35.  The platinum mining stocks are tracking the price of the metal closely.  Unfortunately, platinum has failed to garner as much attention as the likes of gold and silver.  But it’s not going to last forever.  Platinum demand for industrial use, as well as its precious metal qualities, should continue driving prices.  Hold tight for the next leg higher.

. . . . iShares N.A. Technology – Software Index Fund (IGV) – Hold

IGV is closing in on the February high again.  Our software ETF has come charging back after the selloff in March.  In fact, some investors are beginning to wonder if this is the beginning of the dot-com boom 2.0.  That great news for us… Booms are great!  It’s the busts you have watch out for… Continue holding IGV for further gains.

. . . . SPDR KBW Bank ETF (KBE) – Hold

KBE is looking good.  Financial stocks still haven’t regained investors’ trust.  But that isn’t necessarily a bad thing… There’s plenty of upside as investors regain confidence and bid up stocks again.  I’m expecting banks to produce strong Q1 earnings.  And many banks are hiking dividend payments.  Clearly banks are on the upswing.  I’m expecting KBE to pick up steam after the earnings and dividend increases are announced.  Continue holding for the next leg higher.

Action To Take

• Move Market Vectors Global Alternative Energy (GEX) to hold
• Move Market Vectors Gold Miners (GDX) to hold

 

Category: SET Portfolio Updates