Scalper1 News
We are in the middle of the final quarter of this year and the U.S. stocks are shrugging off all global worries and geopolitical issues to give stellar performances. This is especially true as the S&P 500, Dow Jones, and Nasdaq have climbed 6.7%, 7.4% and 7.7%, respectively, so far this quarter and erased all the losses made in the third quarter. Notably, all the three major indices logged the biggest gains last month since October 2011 after a tumultuous ride in August and September. The robust gains were attributed to better-than-expected earnings reports especially from a number of technology players, a wave of mergers & acquisitions, and improvement in the battered energy sector. Additionally, recent headwinds have faded with substantial positive developments seen in the global economy and financial market lately. In particular, the Chinese economy is regaining momentum on the back of better-than-expected GDP growth data and another rate cut, emerging markets are showing signs of stability, and the Japanese and European central banks are seeking additional stimulus measures to revive their economies. Further, seasonality is driving the stock market higher given the crucial holiday shopping season and an expected Santa Claus Rally. Moreover, better economic data including the October jobs report, consumer confidence, inflation and manufacturing data have also injected optimism. All these good tidings have increased the appeal for riskier assets once again leading to a bullish trend in stocks, though bouts of volatility still show up. Given this, we have highlighted four sectors and their related ETFs that have easily crushed the broad market funds by wide margins and been the star performers since the start of the fourth quarter. Energy Despite the fact that oil is exhibiting large swings in its prices, the energy sector has been leading the way higher this quarter. Decreasing U.S. output, a declining rig count, recovering global fundamentals and improving demand are driving up the price of oil, which on the other hand is under pressure from persistent supply glut and a strong dollar. As a result, crude oil price rose to over $49 per barrel in early October and is currently on the verge of going back to the $40 level. While most of the energy ETFs has delivered solid returns, the oil exploration & production corner has been the biggest winner with PowerShares Dynamic Energy Exploration & Production ETF (NYSEARCA: PXE ) gaining 16.3% quarter to date. This fund tracks the Dynamic Energy Exploration and Production Intellidex index, holding 30 stocks in its basket. It is pretty well spread out across various securities as none of these holds more than 5.51% share. It is the high cost choice in the space, with 0.64% in expense ratio. The ETF has AUM of $101.8 million and trades in a low volume of nearly 26,000 shares per day. It has a Zacks ETF Rank of 4 or ‘Sell’ rating with a High risk outlook. Technology After energy, the technology sector has been on a tear with stocks like Amazon (NASDAQ: AMZN ), Alphabet (NASDAQ: GOOGL ) (NASDAQ: GOOG ), Netflix (NASDAQ: NFLX ), Microsoft (NASDAQ: MSFT ), Linkedln (NYSE: LNKD ) and Facebook (NASDAQ: FB ) delivering outstanding performances on the back of a string of solid earnings’ reports. PowerShares Nasdaq Internet Portfolio (NASDAQ: PNQI ) is the top performer in this space, having returned 13.7% so far in the quarter. The fund targets the Internet corner of the broad technology space by tracking the Nasdaq Internet Index and charges 60 bps in fees per year. With AUM of $223.2 million, it holds a basket of 94 securities with concentration on the top five holdings at around 40.9% share. The fund trades in a light volume of around 21,000 shares a day. In terms of industrial exposure, Internet software and services makes up for 57% share, followed by Internet retail (38.1%). PNQI has a Zacks ETF Rank of 2 or ‘Buy’ rating with a High risk outlook. Materials The material sector has been gaining strength especially on its chemical business while metals & mining and steel are still struggling. Growing automotive and residential construction market as well as increasing production is lifting the sector as a whole. That said, iShares U.S. Basic Materials ETF (NYSEARCA: IYM ), having a Zacks ETF Rank of 4 and a High risk outlook, has gained 12.7% so far in the final quarter of 2015. The ETF tracks the Dow Jones U.S. Basic Materials Index and holds 54 stocks in its basket. The top two firms – DuPont (NYSE: DD ) and Dow Chemical (NYSE: DOW ) – dominate the fund’s return with over 10% share each while the other firms hold no more than 7.51% of assets. The fund has AUM of $365 million and charges 43 bps in fees and expenses. Volume is good as it exchanges around 108,000 shares in hand a day. The product is heavily skewed toward the chemical segment, as it makes up for more than three-fourths of the portfolio while steel, forestry & paper, metals & mining receive minor allocations. Biotech After a brutal sell-off in the third quarter, the biotech sector rebounded strongly thanks to attractive valuations, strong earnings growth, and encouraging industry trends. In addition, biotech stocks got a boost from its defensive nature, as these act as safe havens in times of political or economic turmoil. Though most of the biotech ETFs have provided handsome returns, BioShares Biotechnology Clinical Trials Fund (NASDAQ: BBC ) is leading the way higher, gaining in double-digits so far this quarter. This ETF has a novel approach to biotechnology investing as it provides exposure to the companies that have a primary product in Phase I, II, or III of FDA trials by tracking the LifeSci Biotechnology Clinical Trials Index. Holding 90 stocks in its basket, the fund is widely spread out as each firm holds less than 2.3% share. The fund has accumulated $24.7 million in its asset base and charges a higher annual fee of 85 bps per year. It trades in a light volume of 23,000 shares a day and has a Zacks ETF Rank of 3 or ‘Hold’ rating. Original Post Scalper1 News
Scalper1 News