EXCHANGE TRADED
FUNDS Asset Managers: Buy Gold, Commodities
Short-Sale Ban Hits Financial ETFs
Health Care Floats In Ocean Of Shorts
BY DOUG ROGERS
INVESTOR'S BUSINESS DAILY
Posted 10/1/2008
Lost in a sea of inversely charged exchange traded funds that have reaped the benefits of carnage in indexes invested overseas, in materials, chips and myriad other areas, a handful of health care funds are posting gains because investors actually like their holdings.
ProShares Ultrashort MSCI EAFE (EFU) tops the six-month performance list with a gain of 51.8%. The U.S. subprime flu turned into pneumonia overseas, sending major markets tumbling and the ETFs that short them soaring. Investors in such funds will have to be on their toes when the financial crisis is resolved and confidence is restored. Short funds could plunge.
And health care ETFs could hold up better when the tide turns. Much farther down on the six-month performance list sits lightly traded HealthShares Cancer. (HHK) It has gained 10.7% in the past six months and 8% in the past year. It sports a healthy Relative Strength Rating of 85.
Below the HealthShares ETF are several more heavily traded biotech funds. SPDR S&P Biotech (XBI) is up about 10% in the past six months. It's 13% off its high and trading below its 10-week moving average line, but boasts a Relative Strength Rating of 84. Among main weightings are Imclone Systems, (IMCL) Regeneron Pharmaceuticals (REGN) and Amgen. (AMGN)
Imclone has been in play as a takeover target since late July. But no deal has been reached. The developer of treatments for cancer has straddled its 10-week average the past three weeks.
Biotech HOLDRs (BBH) is up about 3% the past six months. It's 12% below its Aug. 15 high and looking for support at its 40-week moving average. Genentech (DNA) is its top weighting at about 44%. The developer of treatments for cancer is 12% off its high. Earnings growth slowed to 5% in Q2, but analysts see a 23% rebound in Q3.
iShares Nasdaq Biotechnology (IBB) is the most heavily traded of the top biotech ETFs for the past six months. It's up about 3% in the period. It's 11% off its Aug. 15 high and sitting on its 40-week moving average line. Among top-weighted components are Amgen, Gilead Sciences (GILD) and Celgene. (CELG)
Amgen is 11% off its 52-week high and settling in to its third week below its 10-week moving average. Volume has dried up and the stock retains a Relative Strength of 96. But earnings growth has shriveled to single digits for four of the past five quarters as sales have evaporated. Analysts see flat results for Q3.
Celgene has swung below its 10-week line and is trying to make a stand at its 40-week line, 18% off its August high. Earnings have slowed but are seen rising 34% in Q3.
Also among top performers is B2B Internet HOLDRs, (BHH) a holdover from the tech bubble that's down to just two stocks in its portfolio: Ariba, (ARBA) with a weighting of about 87%, and Internet Capital (ICGE) at about 13%. It's up 27.3% in the past six months, but in recent weeks has attracted volume way below its average daily level of about 164,000 shares for its 49-cent stock.
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