Scalper1 News
So far, the month December has been downbeat for the U.S. market with the S&P 500 and Nasdaq Composite Index losing about 2.6% each (as of December 9, 2015) and the Dow Jones Industrial Average shedding about 2.2%. The commodity market rout instigated by fresh oil lows, the possibility of a Fed lift-off in a few days, the persistent slump in Chinese economic indicators, milder-than-expected generosity from ECB regarding the stimuli in the Euro zone, a strong greenback and depreciating emerging markets have set the backdrop for this investing lull. People are speculating hard about what the potential bet could be at this point of time, given the above-mentioned deterrents. Since equities are in the negative territory, hearsay is rife that there may not at all be any sector winner this month. For them, below are five sector ETFs which could be in watch for the rest of this month. The sectors have been chosen as per the Zacks Market Strategy. Semiconductor – Market Vectors Semiconductor ETF (NYSEARCA: SMH ) Since the second half of 2015 marked the rebound of tech stocks, semiconductors can’t be far behind. The semiconductor market will be propelled by smartphones and automotive in the coming days. As car sales are soaring and consumers are binging on tech gadgets this holiday season, demand for semiconductors should surge. Moreover, some analysts believe that the PC market is set for a rebound, helping companies like Intel (NASDAQ: INTC ). Meanwhile, the semiconductor titan Intel hiked its dividend and provided a bullish outlook for 2016. Impressive Q3 earnings are also driving this sector. In the last one month (as of December 9, 2015), the fund gained over 2.5%. Medical Devices – iShares U.S. Medical Devices ETF (NYSEARCA: IHI ) Though the healthcare sector has confronted a number of issues regarding steep pricing on drugs, overvaluations of biotech stocks and the future of ObamaCare, the sector sailed through pretty smoothly. The medical sector has seen earnings rising 15.2% on 9.7% higher revenues in Q3, with 80.8% of the companies beating EPS estimates and 59.6% surpassing on revenues. In the sector, medical products seem the most stable if we consider both earnings and revenue growth of 13.4% and 12.2%, and beat ratio of 71.4% and 61.9%, respectively. As much as 86% of the fund is invested in healthcare equipment followed by life sciences tools & services (12.84%). The fund has a Zacks ETF Rank #1 (Strong Buy) and was down 1.4% in the last one month (as of December 9, 2015). US Global JETS ETF (NYSEARCA: JETS ) Development in the airline industry is rampant these days. Busy traffic on improving travel and business demand, restructuring indicatives, stepped-up ancillary revenues, limited capacity growth and most importantly rock-bottom oil prices have put the spotlight on this area. Fuel accounts for a large portion of airlines’ operating expenses and the possibility of soft oil prices for longer has helped the sector to battle headwinds like a stronger dollar and global growth worries. The sole airline ETF JETS might have lost 1.1% in the last one month (as of December 9, 2015) on the November Paris terror attacks which resulted in lower tourism; but is due for a reversal in the coming days. KBW Premium Yield Equity REIT Portfolio (NYSEARCA: KBWY ) The interest-rate sensitive REIT sector might underperform once the Fed enacts a lift-off, but the underlying fundamental for the area is quite strong. As demand for housing picks up in the U.S., and the economy rebounds, the requirement of establishment rises and so does rent. So, income for REITs should go up. Notably, when rates rise on the back of a pickup in the economy, REITs outperform. As per reit.com , “in the 16 periods since 1995 when interest rates rose significantly, Equity REITs generated positive returns in 12.” Finally, REITs are strong dividend vehicle. The fund KBWY yielded 5.59% as of December 9, 2015 which is way above the current benchmark U.S. treasury yield of 2.22%. The fund has a Zacks ETF Rank #3 (Hold) and was flat in the last one month. SPDR S&P Retail ETF (NYSEARCA: XRT ) Traditionally, December is the month for retail and discretionary purchases. Though shopping euphoria has subdued a little among cautious consumers in recent times, spending on apparel, accessories, footwear and tech gadgets is still high thanks to the holiday season. As a result the Zacks Rank #1 XRT should be closely watched. The fund has 22.3% exposure in apparel followed by 16.4% in specialty stores and 15.4% in automotive retail. However, XRT was down 3.6% in the last one month. Original Post Scalper1 News
Scalper1 News