Don Dion’s Weekly ETF Winners and Losers
This was a high-profile week for the technology sector, which saw some excitement from companies launching new product ideas at the Consumer Electronics Show in Las Vegas. 3D television technology generated a lot of buzz, as did Microsoft’s (MSFT) Hewlett-Packard(HPQ) tablet computer, which will compete with a tablet computer from Apple (AAPL) to be unveiled Jan. 27.
Outside of the conference, Google (GOOG) revealed its Nexus One smartphone, which many were hyping as a device that would transform the sector to the same extent that Google revolutionized Internet search.
Internationally, the battle by Kraft(KFT) to take over Cadbury, the British confectioner, saw some notable updates, as Warren Buffett warned Kraft about harming shareholder value in pursuit of a deal. Cadbury, in an effort to find alternatives to the takeover, reached out to Hershey’s(HSY), asking the confectioner to place a rival bid.
In Asia, Japan saw its veteran finance minister step down, and the value of the yen continued to decrease against the dollar on expectations that the new minister, Naoko Kan, will support a weak yen policy. China also got attention this week as growing fears of a bubble, especially in housing, led the government to signal tighter credit in 2010.
In America, a disappointing employment report Friday showed that the U.S. economy lost 85,000 jobs in December, sounded a sour note. Expectations were for better numbers after November figures were revised to show that jobs increased by 4,000. The performance of the automotive sector did surprise some, as reports indicated that there was recovery in the sector in 2009, with Ford doing the best out of the American companies.
Overall, the S&P 500 finished the week up 2.7% while the Nasdaq and Dow saw gains of 2.1% and 1.8%, respectively.
With that in mind, here are the ETF winners in losers for the week:
Winners
Market Vectors Coal(KOL) +12.4%
KOL ended 2009 about where it was in mid-November. Shares declined into early December and then recovered but spent most of the time around $34 or $35 per share.
Investors looked to rotate into the sector at the start of 2010, however. KOL closed 2009 at $36.12, but it quickly climbed to $40 per share in the first three days of trading this year, and closed above that level on Friday.
KOL gained 145% last year, but shares would need to rally another 50% to reach pre-crash levels.
Claymore/Delta Global Shipping(SEA) +12.3%
While SEA also had a nice recovery in 2009, it gained only 28% for the year and finished below where it traded in June. Shares made a series of higher lows, but spent almost six months in a $12 to $14 trading range. The past week’s rally leaves shares higher than they’ve been since October 2008, but like KOL, another 50% rally would be needed to get prices back to pre-crash levels.
iShares Dow Jones U.S. Oil Equipment(IEZ) +10.6%
PowerShares Dynamic Oil Services(PXJ) +9%
SPDR S&P Oil & Gas Equipment & Services(XES) +10.6%
Oil prices climbed above $82 a barrel and energy stocks followed. Baker Hughes(BHI) and Nabors(NBR) powered IEZ and XES with double-digit gains for the week.
Losers
iPath Grains ETN(JJG) +0.3%
iPath Agriculture ETN(JJA) +1%
PowerShares DB Agriculture(DBA) +1.7%
There weren’t a lot of losers this week due to a market upswing, but soybeans tanked on account of a Chinese interest rate increase and favorable weather in South America. Higher rates in China are seen as detrimental for commodity imports, while good weather will boost supply. The commodity funds still managed small gains thanks to the performance of other grains.
Soybeans account for 44% of JJG, 23% of JJA and 12% of DBA.
CurrencyShares British Pound(FXB) -0.8%
It didn’t get pounded, but it was still a bad week for sterling vs. the U.S. dollar. The Bank of England left interest rates at 0.5% and made no change to the quantitative easing policy currently in place. The Australian dollar, which has been strong vs. the U.S. dollar, hit a 25-year high vs. the British pound this week.
iPath Nickel ETN(JJN) -2.6%
While copper and aluminum were moving higher this week, nickel headed in the opposite direction.
