Friday, February 1, 2008

What Fell and What’s Bouncing

The chart below shows two different performance sorts of sector ETFs. On the left are the top ETF sector performers during the past month; on the right are the top ETF sector performers during the past five days. For the record, these graphics were generated by and can be sorted by any time frame specified in the columns.

Not surprisingly, the big winners for the month were the ultrashort ETFs, particularly in technology and energy sectors. On the long side, real estate and finance-related ETFs showed well during the month, an indication that these sectors may be attracting a fair amount of bottom feeding activity.

Switching to performance data for the last five days, one can clearly see the strong buying action in the real estate and financial sectors, with retail and basic materials ETFs also supporting the recent bounce. So far, the bullish action following last week’s bottom has been driven largely by sectors sensitive to interest rates and cyclical growth. The technology sector, which had a nice bounce pre-FOMC, has been largely absent from the party during the past few days.


Anonymous said...

Wasn't that spike in the vix last week the bottom?

Bill Luby said...

Hi Gary,

If only it were so easy...

IMHO, the VIX spike increases the likelihood of a bottom, but by no means makes it a slam dunk. Further, if it is a bottom, it might only be a short-term bottom that gets taken out in a week or two and not necessarily one that will hold for a matter of years.

For trading purposes, however, I am going to treat the present situation as a bottom until further notice...



Ben Bittrolff said...

I've updated my post and charts: Fed CHANGES Really Scary Fed Charts

Removing TAF makes a significant difference.

$50 billion to be exact.

TAF operations are ongoing. So this discrepancy would just continue to grow.

LIBOR is also starting to misbehave, again. Nothing too serious yet (not like before Christmas) but you get my drift. Stress is creepying back into the system.

The (counter trend) rally in risky assets should just about be over, if I've interpreted this correctly.


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