ETF Wrap: Best Sector ETF Bets for the New Year and Alternatives for Extremely Overbought ETFs
Here are new ways to approach overbought ETFs, along with information on choosing the right Europe-focused ETFs and sectors for 2013
Unique Alternatives for Extremely Overbought ETFs
Since the summertime lows, a number of themes have gained enormous traction. US real estate is benefiting from ultra-low mortgage rates, limited supply, and remarkable demand from overseas buyers.
Chinese leadership continues to provide just enough government support to maintain economic targets. And the European Central Bank is having success at containing its sovereign debt woes, in spite of the region's deepening recession.
Investors that engaged the trends early have profited immensely from price appreciation in certain ETFs. Since June, for example, the iShares DJ Home Construction Fund (NYSEARCA:ITB) has had little difficulty soaring skyward on the notion that a genuine real estate renaissance is in progress.
However, if fiscal cliff concerns elevate as 2012 draws to a close, you may see investors with large capital gains in the sector take profits. Apple (NASDAQ:AAPL) shareholders have witnessed this activity for more than a month. Read more...
10 Top Europe ETF Picks for 2013
By this point in the year, it will not come as a surprise to most investors that many ETFs tracking developed European economies have delivered stellar returns in 2012. Metaphors involving rising from the ashes and Lazarus would be appropriate ways to describe the manner in which many Europe funds have acted this year.
Whether it was yield hunting, the allure of tempting valuations or just a hunch that things could not get much worse, investors embraced an array of Europe-focused ETFs in 2012. From the largest Eurpope ETFs to the newer names such as the Market Vectors Germany Small ETF (NYSEARCA:GERJ) to the contrarian plays such as the Global X FTSE Greece 20 ETF (NYSEARCA:GREK), 2012 was generally a good year in which to be long a couple of Europe ETFs. Read more...
Best Sector ETF Bets for the New Year
Last week’s action in the Dow Industrials (INDEXDJX:.DJI) and S&P 500 (INDEXSP:.INX) was positive but as I noted in Friday’s Week Ahead market review, even higher prices and very strong readings from the market internals are needed to signal upward acceleration.
The importance of sector selection was emphasized last week because while the Spyder Trust (NYSEARCA:SPY) gained just 0.2%, the Select Sector SPDR Financial (NYSEARCA:XLF) was up an impressive 1.7%. On the downside, the Select Sector SPDR Materials (NYSEARCA:XLB) dropped 1.8% for the week. Read more...
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