Dion Money Management Blog   Money Management for Retirees and Their Families

Welcome to Don Dion’s Daily ETF Winners and Losers. Be sure to stop by each day to get a feel of who’s winning and who’s losing when it comes to ETFs.

Winners

iPath Dow Jones-UBS Grains Total Return Subindex ETN(JJG) 4.3%
The grain industry is scoring impressive gains today from the strength in corn prices.

In a report from the U.S. Department of Agriculture, researchers found that farmers had planted fewer acres of corn than even their lowest range predictions.

Corn accounts for slightly more than a third of JJG’s index.

iShares MSCI Spain Index Fund(EWP) 1.7%
The Spain ETF jumped today after a report found that demand for European Central Bank loans was lower than expected.

Banco Santander(SAN) and Banco Bilbao Vizcaya Argenta(BBVA) jumped higher off the news. Together, these two holdings account for 30% of the fund’s total portfolio.

EWP’s second largest holding, Telefonica(TEF), is scoring gains as well after Portugal’s government blocked its bid for the stake of Brasilcel owned by Portugal Telecom.

PowerShares India Portfolio(PIN) 2.3%
Despite economic tensions that continue to face Europe and China, India’s markets have performed noticeably well. On Wednesday, PIN and other India focused ETFs rose as the Indian rupee found strength and the nation’s government announced it would partially deregulate fuel prices.

From a technical perspective, PIN and WisdomTree India Earnings Fund(EPI) have managed to stay above their 50-day moving averages all year.

Market Vectors Indonesia ETF(IDX) 1.6%
IDX is another Asian nation fund which has performed well despite the recent spell of economic headwinds. Currently the fund, which is designed to track a basket of the most prominent companies comprising the Indonesian market, is on the verge of testing previous 2010 highs. Investors should keep a close eye on this fund to see if it can overtake this level.

Oil Services HOLDRs(OIH) 2.3%
Despite the trouble in the Gulf, the energy industry is turning out strong gains. Baker Hughes and Halliburton are among the top performing oil players driving OIH on Wednesday. Other oil-industry related ETFs heading higher include SPDR S&P Oil & Gas Equipment & Services ETF(XES), iShares Dow Jones U.S. Oil Equipment Index Fund(IEZ) and PowerShares Dynamic Oil &Gas Services Portfolio(PXJ).

Losers

iPath S&P 500 VIX Short-Term Futures ETN(VXX) -2.0%
Yesterday’s tumble brought the S&P to the verge of breaking through the closely watched 1040 level. However, on Wednesday, the markets showed resilience, powering higher and driving fear back for the time being.

Despite today’s strength, investors should continue to practice caution heading into the rest of the week.

Telecom HOLDRs(TTH) -0.4%
The top heavy telecom HOLDRs fund is taking a hit today thanks to strain from both AT&T(T) and Verizon(VZ). Together, these two firms represent nearly three quarters of the fund’s total portfolio, making it an excessively risky play.

Disclaimer

A more than 10% drop in the equity markets since April has presented a gift to investors who want to buy stocks ahead of earnings season. ETFs in the technology and energy sectors look set to perform well.

In my ETF Action Newsletter I have a hefty exposure to technology through the PowerShares QQQ (QQQQ) and First Trust Dow Jones Internet Index(FDN).

QQQQ has about 20% of its portfolio in Apple(AAPL), with big name technology companies rounding out the top ten. Microsoft(MSFT), Google(GOOG) and Qualcomm(QCOM) each have more than 4% of the fund’s assets, but the weightings fall quickly and number 10 holding Gilead Sciences(GILD) has less than 2% of assets.

The huge weight in Apple makes the company the driving force in QQQQ and it’s been a positive one over the past three months. Shares are up more than 16% in this period, compared to a loss of about 6% for the Qs.

Even though Apple has had a good run, the launch of the iPad and the iPhone 4 are likely to power earnings and generate a positive outlook from the company. Analysts did a better job of forecasting Apple’s earnings in the previous quarter, coming in too low by only 36%, much better than the 70%-plus misses in the previous three quarters.

Earnings estimates for this quarter have already climbed more than 6% in the past month and they’re likely to be too low, once again. Therefore, I expect Apple to continue to pull QQQQ higher.

A fund with potentially more upside, however, is FDN. This fund is down about 5%, similar to QQQQ over the past three months, but the performance of the top components was the opposite. Whereas Apple pulled QQQQ higher, Google(GOOG), Amazon(AMZN), eBay(EBAY), Yahoo(YHOO) and Juniper(JNPR) have dragged on FDN’s performance, with losses ranging from about 10% to more than 20%. Estimates for these five firms, which account for about 32% of the ETF, have held steady over the past few weeks.

At nearly 10% of assets, Google may be the most important of the group, and if the buzz over iPhone 4 is helping Apple, Google may be in for its own rally. The Android operating system is gaining wider acceptance from consumers and the newest phones are very competitive in terms of features. Motorola(MOT) is rolling out new Android phones, while Samsung is launching phones for all five major U.S. wireless networks. In August, the next generation of the Android operating system will also be available.

Given that one-third of FDN has been pulling the fund lower and investors haven’t been optimistic, I anticipate that this ETF will be able to outperform QQQQ during earnings season, although I expect both to do well.

As for energy, the global selloff in May hammered oil prices and energy stocks alike, while the BP(BP) disaster has kept a cloud of uncertainty over the industry as regulators consider new rules for drilling.

Oil prices have rebounded into the mid $70s per barrel though, and while there are worries about a weak economic recovery, demand for oil remains robust. Investors have been focused on negative news and a weak stock market, but analyst estimates for oil majors such as Chevron(CVX) and ConocoPhillips(COP) have been climbing.

In terms of ETFs, a solid play on the broad energy sector can be had with the Energy Select Sector SPDR(XLE). The fund owns the oil majors, independent producers and service companies such as Schlumberger (SLB) and Halliburton(HAL). Thanks to the hefty yield on some of the majors, the fund also delivers a solid 2% dividend yield.

For investors interested in a more aggressive energy ETF, the SPDR S&P Oil & Gas Equipment & Services ETF(XES) is the way to go. Although the fund is broadly diversified, with individual holdings ranging from 4.4% to 3.7% of assets, it still has taken a beating over the BP disaster in the Gulf. Shares have underperformed XLE and are down more than 20% since the Deepwater Horizon accident, well ahead of the roughly 15% drop in XLE and the 10% decline in the S&P 500 Index.

Last year, stocks were trading in early July at the same level they were at two months earlier in May. A positive earnings season was kicked off by Goldman Sachs(GS) and the rest of the market’s solid earnings generated a powerful rally. With fear high right now, investors may be pleasantly surprised by better earnings numbers next month, and it’s the energy and technology sectors that may deliver some of the best results.

Disclaimer

Welcome to Don Dion’s Daily ETF Winners and Losers. Be sure to stop by each day to get a feel of who’s winning and who’s losing when it comes to ETFs.

Winners
iPath S&P 500 VIX Short-Term Futures ETN (VXX) 6.7%
Thanks to a dismal consumer confidence report and concerns regarding China’s economic growth prospects, fear is in abundance and the VIX is scoring gains. Over the past week and a half, VXX has staged an impressive bounce against its 50-day moving average but remains too dangerous to consider a long-term holding.
CurrencyShares Japanese Yen Trust (FXY) 1.0%
Rather than using VIX-based ETFs like VXX to play down days like these, I would advise investors to use funds like FXY, iShares Barclay’s 20+ Year Treasury Bond Fund(TLT) and iShares COMEX Gold Shares(IAU) as stable defensive plays.

Today, all three of these funds have managed to avoid falling into negative territory.
Losers
iShares MSCI Switzerland Index Fund (EWL) -6.0%
The strength of the Swiss franc does not have the National Bank of Switzerland worried as evidenced by their comments regarding the lack of deflationary risk issued on Monday. However, investors do not appear to share the same sentiment and EWL is suffering. EWL is actually down about 2% from yesterday’s late trading, ahead of the eurozone country ETFs, but a very large spike at the end of the trading day has led to the large reported loss today.

Investors can play the nation’s currency, which has recently surged against the euro and the U.S. dollar, using the CurrencyShares Swiss Franc Trust(FXF).
Market Vectors Coal ETF (KOL) -5.2%
Concerns about China’s growth prospects are putting pressure on commodities and materials funds, driving KOL, Market Vectors Steel ETF(SLX), SPDR Metals & Mining ETF(XME) and iPath Dow Jones-UBS Copper Total Return Subindex ETN(JJC) lower.

Investors interested in playing materials in the future should continue to keep a close watch on this Asian powerhouse. The nation’s demand for resources is a strong determinant of price direction.
iShares MSCI Italy Index Fund (EWI) -4.8%
Europe’s debt crisis has managed to steal back some headlines, causing investors to flee the most troubled of the currency bloc’s constituents. EWI and iShares MSCI Spain Index Fund(EWP) are funds that represent some of the most at-risk nations in Europe right now and should be avoided entirely.

First Trust ISE Chindia Index ETF (FNI) -4.8%
China’s markets took a heavy hit today on concerns about the nation’s economic growth prospects. FNI and PowerShares Golden Dragon Halter USX China Portfolio(PGJ) are among the China-focused ETFs taking the biggest hits. FNI is designed to provide investors with exposure to both the Chinese and Indian markets. Although geographically the fund’s index is diverse, it still maintains heavy exposure to China’s massive state run firms I have advised investors against in the past.

Continue to turn to Claymore/AlphaShares China Small Cap Index ETF(HAO) to fulfill your thirst for Chinese equities.

Disclaimer

During Russian President Dmitry Medvedev ’s visit to the U.S. last week, among other objectives, he presented the concept of Russia as a modernizing country worthy of increased foreign investment. Investors looking to tap the country’s newfound emphasis on economic reform can gain exposure with Market Vectors Russia (RSX).

A little over a week ago, Medvedev announced that Russia’s capital gains tax on direct investment would be abolished starting in 2011. The number of industries that are off-limits to foreigners will also be reduced by more than 80% as the country looks to attract foreign investors.

This policy change came days before the president visited the U.S., including a stop in Silicon Valley, where he promoted a Russian tech initiative. The country wants to develop its own “Silicon Valley” and Medvedev secured a $1 billion pledge from Cisco(CSCO) over the next decade.

Some of the money is going toward building the new innovation city near Moscow. The city is expected to have its own regulations and tax code, in an apparent attempt to create a location where the Russian economy can turn a new page and get a fresh start.

It is acknowledged though that there are significant barriers to attracting this type of innovative investment in Russia, chief among them being corruption and bureaucratic obstacles.

Also, while Medvedev is promoting the new innovative and capitalist Russia, old frictions resurfaced with yesterday’s arrest of 10 people accused of being involved in a long-term espionage ring for Russia.

While the goal of the agents was mainly political, one of the targets was a wealthy financier and information about the “global gold market” was collected. Russia has stepped up its overt competition for capital, but the covert battle for economic intelligence continues.

For investors that have confidence in the new face of Russia, a country looking to join the WTO with a modernizing and internationally competitive economy, there is really only one viable ETF option: Market Vectors Russia ETF(RSX).

Another Russia focused equity ETF does exist in SPDR S&P Russia(RBL), but RBL’s volume is so low that investors could face concerns over the liquidity of the fund.

The currency ETF, Currency Shares Russian Ruble Trust (XRU), is also not a good option because of very low trading volume.

RSX is largely a play on energy prices and this reflects the nature of the Russian economy, something that Medvedev hopes to change with the new initiatives.

The energy-based model for Russia’s growth has faced criticism due to its large impact on the economy. Weakness in the energy sector contributed to a GDP contraction of 7.9% in 2009.

That steep drop in GDP was presaged in 2008, when RSX fell nearly 75%.

Although the fund went on to rebound 140% in 2009, RSX is down about 4% this year and 50% below its 2008 peak.

These huge swings reveal how sensitive the Russian economy and this ETF are to the worldwide demand for resources. Comparing RSX to an oil ETF, United States Oil (USO), also shows that there is a significant amount of correlation between the price of this commodity and the Russia ETF’s performance.

Investors will have to decide for themselves whether or not they believe Medvedev can improve the business environment in Russia and diversify the economy in the long term, an effort that will take years to complete.

For now, RSX remains heavily dependent on energy and investors may want to consider investing in the country as a play on a continued improvement in worldwide economic activity.

Disclaimer

Switzerland and the Swiss franc remain economic bright spots amidst the otherwise troubled European continent.

ETF investors have the ability to access this nation and its currency using the iShares MSCI Switzerland Index Fund(EWL) and the CurrencyShares Swiss Franc Trust(FXF).

Throughout the recent spell of economic turmoil, EWL has fallen along with other European nation-focused funds. However, comparing the fund’s most recent three months performance to that of a broad eurozone fund such as the iShares MSCI EMU Index(EZU), EWL’s performance has been several percentage points better. One reason has been the investors exiting eurozone banks for the safety of Swizterland, which has lifted the Swiss franc.

iShares Switzerland provides investors with the opportunity to profit from the performance of the broad Swiss market by tracking a basket of some of the largest publicly traded companies based in the nation.

According to the fund’s sector breakdown, EWL is a relatively defensive fund, with health care and consumer staples firms representing the two largest slices of the fund’s total portfolio. Together, these two sectors account for over 50% of its total assets.

In total, EWL’s index consists of 38 individual holdings. However, the fund is particularly heavily weighted towards its top positions which include Nestle(NSRGY), Roche, and Novartis(NVS). Together, these three firms represent 45% of the fund’s total index.

Given the fund’s heavy exposure to staples and health care, it is evident that the success of EWL hinges on the state of Switzerland and the rest of the globe’s consumer sector.

In recent weeks, however, one of the crucial factors behind the Switzerland’s ability to weather the current economic headwinds facing the rest of Europe has been the strength from its currency, the Swiss Franc.

Although the nation borders EU giants France, Germany and Italy, Switzerland remains independent from the European Monetary Union and continues to rely on the Swiss franc as its currency.

In recent months, the euro has struggled as members of the currency bloc continue to battle against their respective looming debt issues. Seeing the euro’s decline against the franc as a threat to its economy and exports, the Swiss National Bank had been taking dramatic action. Up until recently, the bank had been selling francs to buy euros in hopes of providing some support for the troubled currency.

Initially, the SNB was able to slow and even temporarily reverse the appreciation of the franc against the euro. However, the market eventually overwhelmed their efforts and, in mid June, the bank put an end to its policy, thereby giving the all-clear for the franc to once again climb higher against the euro.

Initially, the SNB was able to slow and even temporarily reverse the appreciation of the franc against the euro. However, the market eventually overwhelmed their efforts and, in mid June, the bank put an end to its policy, thereby giving the all-clear for the franc to once again climb higher against the euro.

Disclaimer

Welcome to Don Dion’s Daily ETF Winners and Losers. Be sure to stop by each day to get a feel of who’s winning and who’s losing when it comes to ETFs.

Winners

iShares MSCI Singapore Index Fund(EWS) 1.2%
EWS, iShares MSCI Thailand Investable Market Index Fund(THD) and Market Vectors Vietnam ETF(VNM) are three Asian-focused single nation funds rising.

The Vietnam ETF’s gains can be attributed to news of the nation’s ambitious development plans as well as reports that the World Bank had approved loans valued at more than $450 million for the nation.

Consumer Staples Select Sectors SPDR Fund(XLP) 1.1%
Today’s jittery market is driving investors towards the safest and most stable sectors of the U.S. economy. Consumer staples funds such as XLP and Vanguard Consumer Staples ETF(VDC), as well as utilities funds like Vanguard Utilities ETF(VPU), have benefited the most from this flight to safety.

iShares MSCI Switzerland Index Fund(EWL) 0.4%
The Swiss ETF is managing to hold onto gains today thanks to an optimistic outlook presented by one of the nation’s top central bankers. In recent weeks the nation’s currency, the Swiss franc, has rallied against the euro, reaching record highs. However, despite this strength, the Swiss National Bank insists that there is no threat of deflation on the horizon for the nation.

Losers

United States Natural Gas Fund(UNG) -3.6%
Natural gas prices are taking a hit today as traders unwind bets ahead of contract expirations. UNG and iPath Dow Jones-UBS Natural Gas Total Return Subindex ETN(GAZ) will be volatile though, as the Atlantic hurricane season gets into full swing.

WisdomTree DEFA ETF(DWM) -0.9%
On Monday, the U.S. markets have not been alone in being shaky. As seen by the performance of the WisdomTree DEFA ETF, pressure is being felt around the globe. DWM is designed to track dividend-paying companies hailing from Europe, Far East Asia, and Australasia.

Investors seeking international exposure may want to keep DWM on their radar. The fund’s divided focus will deliver income despite economic uncertainty. My favorite pick for dividend-paying companies is the domestic iShares Dow Jones Select Dividend Index Fund(DVY).

ETFS Physical Palladium Shares(PALL) -2.3%
Precious metals are taking a hit today with palladium and silver leading the downward action. Both physically backed funds such as PALL, iShares Silver Trust(SLV) and ETFS Physical Silver Shares, as well as the miner-focused Global X Silver Miners ETF(SIL), are heading lower. Gold is also feeling pressure after it approached all time highs this morning. iShares COMEX Gold Shares(IAU) is currently down 1.2%.

Disclaimer

With a date finally set for a landmark trade-deal to be signed between Taiwan and China, investors may find that now is a good time to look at iShares MSCI Taiwan Index Fund(EWT).

Scheduled to be signed Tuesday, the deal, known as the Economic Cooperation Framework Agreement, is already being hailed as the most significant economic agreement between the two parties in the past 60 years.

The bulk of the deal consists of reducing tariffs on more than 800 products.

All in all, the deal is expected to result in a $100 billion increase in two-way trade over the Taiwan Strait.

Although closer relations between Taiwan and China may make some politicians in Beijing and Taipei nervous, the trade deal is expected to be welcomed by businesses and subsequently by markets.

Investors can bet on the success of the new economic deal by using a China ETF such as iShares FTSE/Xinhua China 25 Index(FXI) or Claymore/AlphaShares China Small Cap(HAO). However, I think EWT would be a more direct play on the impact of the trade deal than HAO or FXI because its smaller economy will mean that the boost in trade will be more noticeable. With 120 holdings, EWT’s largest two holdings command more than 20% of net assets in the fund. The first company, Taiwan Semiconductor Manufacturing(TSM), specializes in making semiconductor equipment for a variety of electronic devices.

Because TSM accounts for 13.8% allocation of net assets, EWT will be affected by long and mid-term trends in shares of this holding. Recently though, this could prove to be a good thing as there has been a steady flow of positive news from the semiconductor sector as 2010 has progressed.

In a broader sense, EWT will generally receive direction from information technology companies since these represent a 60.9% section of the fund’s sectoral allocation. The next largest sector in the ETF is financials, which account for only 14.4% of the fund’s exposure.

The fund’s second largest holding is Hon Hai Precision Industry. Foxconn, the company that was in the news recently for giving wage increases at electronic device manufacturing plants in China after a spate of worker suicides, is an important division of Hon Hai.

The company has large interests in China in terms of its production facilities and the company exemplifies the importance of cross-Taiwan strait relations in the business world, since many other Taiwanese companies also have factories in China where labor is cheaper.

The new trade deal, which will cut tariffs on the trade of products across the Taiwan Strait, should help to improve the flow of goods for this sort of company.

Furthermore, reduced tariffs will make it easier for Taiwanese companies to profit without relying on keeping wages at their current low levels.

This could have the effect of giving more room for wage increases at the many Taiwanese-owned facilities in China and in turn boost domestic consumption in China as workers will have more disposable income.

Overall, the agreement is timely as it will act as a sort of permanent stimulus package that will help to ensure that both the Taiwanese and Chinese economies continue to emerge with strength from the recession.

Improved trade between the two parties or even just the prospect of better business will not go unnoticed by markets and investors who are optimistic on the agreement can best bet on it with ETFs by using EWT. With a date finally set for a landmark trade-deal to be signed between Taiwan and China, investors may find that now is a good time to look at iShares MSCI Taiwan Index Fund(EWT).

Scheduled to be signed Tuesday, the deal, known as the Economic Cooperation Framework Agreement, is already being hailed as the most significant economic agreement between the two parties in the past 60 years.

The bulk of the deal consists of reducing tariffs on more than 800 products.

All in all, the deal is expected to result in a $100 billion increase in two-way trade over the Taiwan Strait.

Although closer relations between Taiwan and China may make some politicians in Beijing and Taipei nervous, the trade deal is expected to be welcomed by businesses and subsequently by markets.

Investors can bet on the success of the new economic deal by using a China ETF such as iShares FTSE/Xinhua China 25 Index(FXI) or Claymore/AlphaShares China Small Cap(HAO). However, I think EWT would be a more direct play on the impact of the trade deal than HAO or FXI because its smaller economy will mean that the boost in trade will be more noticeable. With 120 holdings, EWT’s largest two holdings command more than 20% of net assets in the fund. The first company, Taiwan Semiconductor Manufacturing(TSM), specializes in making semiconductor equipment for a variety of electronic devices.

Because TSM accounts for 13.8% allocation of net assets, EWT will be affected by long and mid-term trends in shares of this holding. Recently though, this could prove to be a good thing as there has been a steady flow of positive news from the semiconductor sector as 2010 has progressed.

In a broader sense, EWT will generally receive direction from information technology companies since these represent a 60.9% section of the fund’s sectoral allocation. The next largest sector in the ETF is financials, which account for only 14.4% of the fund’s exposure.

The fund’s second largest holding is Hon Hai Precision Industry. Foxconn, the company that was in the news recently for giving wage increases at electronic device manufacturing plants in China after a spate of worker suicides, is an important division of Hon Hai.

The company has large interests in China in terms of its production facilities and the company exemplifies the importance of cross-Taiwan strait relations in the business world, since many other Taiwanese companies also have factories in China where labor is cheaper.

The new trade deal, which will cut tariffs on the trade of products across the Taiwan Strait, should help to improve the flow of goods for this sort of company.

Furthermore, reduced tariffs will make it easier for Taiwanese companies to profit without relying on keeping wages at their current low levels.

This could have the effect of giving more room for wage increases at the many Taiwanese-owned facilities in China and in turn boost domestic consumption in China as workers will have more disposable income.

Overall, the agreement is timely as it will act as a sort of permanent stimulus package that will help to ensure that both the Taiwanese and Chinese economies continue to emerge with strength from the recession.

Improved trade between the two parties or even just the prospect of better business will not go unnoticed by markets and investors who are optimistic on the agreement can best bet on it with ETFs by using EWT.

Disclaimer

The financial reform bill, a China-Taiwan deal and the earnings of a major agricultural company will have a bearing this week on a number of ETFs.

Monsanto(MON) reports earnings on Wednesday and analysts are looking for 80 cents a share, which is about half of the estimate from three months ago and down 40% from estimates from a month earlier.

Generic competition for its Round-Up weed killer, plus increased natural resistance to the formula, has hit the company this year.

Monsanto’s stock performance has been negative all year long, leading to a 40% drop in shares. MOO hasn’t fared much better, having performed weakly all year before turning negative in late April. MOO is well above its lows from 2009, unlike Monsanto, which is at new lows, but shares still look weak.

iShares: MSCI Taiwan(EWT)
This week, China and Taiwan will sign a trade deal that could increase trade between the countries by $100 billion.

The deal is favorable for Taiwan’s farm industry and entertainment sector, as the island nation provides a steady supply of television programming and pop stars.

Overall, the pact appears more economically favorable to Taiwan, as China may be drawing the island closer with carrots instead of sticks.

The impact of the deal on EWT will be very indirect, as several of the top holdings in EWT are global companies, but there may be a pop this week if it generates investor optimism.

A very thinly traded ETF, the IQ Taiwan Small Cap ETF(TWON), is likely to see a more direct benefit from the deal over the course of time, but on most days volume has been measured in the hundreds of shares, with some days seeing no trades at all.

Claymore/Alpha Shares China Small Cap(HAO)
China ETFs bounced last week thanks to the revaluation of the country’s currency, but shares of HAO moved lower by the end of the week. iShares FTSE/Xinhua China 25(FXI) fared better, with a small gain for the week.

Both funds have moved very close to their 200-day moving averages and it will be interesting to see if the yuan boost carries through to this week and turns the charts slightly more bullish.

On Friday, the Chinese let the yuan climb higher versus the U.S. dollar after U.S. complaints. American politicians were upset after the yuan fell on Tuesday.

CurrencyShares Swiss Franc(FXF)
The Swiss have learned a lesson in currency intervention: don’t do it. Central banks have rarely been able to push currencies in the direction of their choice for long, with the dominant trend resuming as soon as the intervention ends.

The Swiss were concerned about the franc rising sharply against the euro, as Europeans move assets out of European banks and into Switzerland, so the central bank sold francs and bought euros.

They were able to slow and briefly reverse the appreciation of their currency versus the euro in May and June, but this also caused the franc to weaken versus the U.S. dollar, as the chart of FXF shows.

With the franc stubbornly strong versus the euro, however, and a mounting bill for currency interventions growing, they finally threw in the towel. The result was a spike in the value of the Swiss Franc versus the euro and the U.S. dollar. FXF gained another 1% last week, bringing its rally versus the U.S. dollar to more than 6% in a little over two weeks.

The currency rally has helped iShares MSCI Switzerland(EWL) turn in a decent performance. In local currency, the MSCI Swiss index lagged the indexes of large European economies, but after adjusting for the currency change, it has one of the best returns in June.

The franc should pull back versus the U.S. dollar this week, though, and EWL will likely follow.

SPDR Gold(GLD)
Gold needs to close at an all-time high to signal a continuation of the rally. It has been trading in a very tight range between about $1,220 and $1,250 an ounce in June, with GLD in a similarly tight range between about $119 and $122 per share.

Gold has continually failed to break out to new highs this month, but at the other end, the lows are slowly creeping higher. This suggests that a break to the upside is more likely than a break to the downside.

Financial Select SPDR(XLF)
Financials finally received some good news as the financial reform bill came out of conference committee on Friday of last week. It remains to be seen whether there are enough votes to pass the bill this week, but given that it is less contentious than the health care bill that made it through Congress, passage seems likely.

Health care stocks rallied until the final passage of the health care bill before selling off as the provisions of the bill were digested.

In the case of the financial bill, there are some tough provisions on derivatives, but for the most part the bill lacks teeth. For instance, the Volcker Rule, which proposed a ban on proprietary trading, was instead changed to allow 3% of capital to be used for the bank’s own trading. According to a report from CNBC, almost all the banks have this amount or less in proprietary trading.

With uncertainty gone and a mostly favorable outcome for financials, the sector should outperform this week.

Disclaimer

Winners

iPath S&P 500 VIX Short Term Futures ETN (VXX) +10.9%
Fear fell back into favor this week as debt concerns in Europe rattled investors.

In the past week, VXX has managed to see a bounce off its 50-day moving average, recovering all of the losses it suffered during the prior week.

Given the economic issues that persist in today’s global markets, volatility is certain to be present, but VXX is best watched from the sidelines.

Claymore/AlphaShares China Real Estate Index ETF (TAO) +2.7%
China surprised the global markets this week when the nation decided to relax its grip on the yuan. The currency’s gains helped power the nations markets higher, providing some welcomed relief to the real estate sector and TAO. Since mid-April, this fund has struggled to gain a footing as Beijing lawmakers take steps to cool the overheating property market.

PowerShares DB Base Metals ETF (DBB) +5.8%
Base metals witnessed an impressive rally this week. Copper was one of the fund’s strongest constituents, with iPath Dow Jones-UBS Copper Total Return Subindex ETN (JJC) also making this week’s winners list. The gains from this red metal come even after less than optimistic U.S. housing numbers.

Going forward, base metal investors should keep a close watch on China. This nation’s demand for copper, aluminum and zinc will likely play a huge factor in determining their prices.

Losers

First Trust Revere-ISE Natural Gas Index ETF (FCG) -7.1%
Natural gas prices and United States Natural Gas Fund(UNG) continued to fluctuate in response to weekly government reports and weather forecasts. In the end, both ended the week lower.

The natural gas producers faced additional heat this week thanks to a slew of bad press. At the start of the week, HBO screened, “Gasland,” the award winning documentary that highlights the negative effects the hydraulic fracturing, or “fracking” method of gas extraction has on the environment. Additionally, Vanity Fair published its own detailed article depicting the negative effects the gas industry has had on the lives of the people living close to fuel production sites.
Shares MSCI Spain Index Fund (EWP) -6.5%

Recently, the debt crisis facing the European Union has been pushed to the back of investors’ minds. However, this week, fear returned and the most troubled constituents of the currency bloc were forced lower. EWP and iShares MSCI Italy Index Fund(EWI) (were among this week’s biggest international market-focused ETF losers.

iShares Dow Jones U.S. Oil Equipment & Services Index Fund (IEZ)  -5.3%
Oil producers got hit on two flanks this week, leading to tough times for industry related products: IEZ and iShares Dow Jones U.S. Oil & Gas Exploration & Production Index Fund(IEO). Not only did oil prices tumble this week, but BP(BP)  continued to fumble in its efforts to end the crisis facing the Gulf of Mexico, leading to continued anger, fear, and frustration from investors. Cost estimates of BP’s clean up are currently more than $2 billion.

Disclaimer

Although I was not surprised that the Federal Open Market Committee (FOMC) left interest rates unchanged on Wednesday, I believe their accompanying statement was more downbeat than investors expected. Not only did it tone down its remarks regarding economic recovery—choosing to call it “proceeding” rather than “strengthening”—other parts of the statement alluded to greater uncertainty regarding housing and employment. Overall, with the expiration of emergency monetary measures already underway, the limits of policy stimulus may have been reached, and the true strength of the recovery will now be tested.

In fact, on Tuesday, data showed that existing home sales dipped 2.2% in May, meaning that the benefits of the credit extension were waning faster than expected, or had less of an impact. Nevertheless, home sales have climbed 25% since their lowest point in January 2009. Meanwhile, the Federal Reserve’s view on employment may have been affected by the token headline gain of 431,000 new jobs in May, which was dominated by census hiring, while private payroll hiring was a paltry 41,000. The hope is that the census had a temporary crowding-out effect, similar to previous cycles, as private employers competed to retain or add skilled workers to their ranks.

The Fed’s choice of language, however, reflects the lull in activity that the stock market has already priced in since late April. Stocks have performed better over the past three weeks and have managed to repair some of the damage inflicted by the May correction. Yet, just as it took the S&P 500 Index three attempts to poke above its 200-day moving average, the 50-day moving average may prove significant resistance as well. On Monday the S&P 500 attempted to push above this level on an intraday basis, but the index turned down and closed lower on the day, creating a bearish reversal that may take time to repair. Other indices, such as the Nasdaq, ended six consecutive up days and a seven percent gain with its own reversal, which set the tone for the remainder of the week.

Although the earnings season officially gets underway in less than three weeks, when Alcoa announces its results, some companies will soon begin the process of pre-announcing their earnings for the second quarter. These results will be paramount for analysts and may, in the end, have the most impact on market levels in coming weeks. The expectation is that corporate profits will remain solid in the second quarter, but that positive surprises may be harder to come by now that the effects of cost cutting and productivity improvements have run their course. The forecasts for 2011 may garner the most attention as investors assess what the next market catalyst will be.

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