Dynamic Growth: ETF Portfolio
NEW BUYS:
None
NEW SELLS:
VWO: Vanguard ETF Emerging Markets- .300
SWITCHES:
To Honorable Mention
Back to Top 10:
PGJ: PS Golden Dragon China Fund- .307
PZD: PowerShares Cleantech Portfolio- .335
Here are our Top 10 ETF's for the week of February 4th:
1) DBA: Powershares DB Agriculture Fund- .587
2) EWZ: Brazil Index- .469
3) SLX: Market Vectors Steel Index Fund- .448
4) FXF: Currency Shares Swiss Franc Trust- .473
5) EEB: Claymore ETF BNY BRIC- .422
6) PGJ: PS Golden Dragon China Fund- .307
7) ADRE: BLDRS Emerging Markets 50 ADS Index Fund- .335
8) INP: India Total Return Index- .318
9) PZD: PowerShares Cleantech Portfolio- .300
10) IYF: iShares Dow Jones US Financial Sector- Not Rated
Honorable Mention:
OIH: Oil Services HOLDRS- .296
Notes:
Since I believe we are seeing a short covering/oversold rally, I am not finding many ETF's that look attractive at current levels. It seems to me that Bonds, Gold, and select Commodities and Currencies are severely overbought, and the remaining ETF's are in the early stages of a bear market.
The biggest rebounds in price were among the Homebuilders followed by the Financials. By adding the iShares Dow Jones US Financial Sector (IYF +8.32% for the week), we caught a sizable bounce off the recent lows.
Here are our Top 10 Fidelity Sector Funds for February 2008:
1) FSESX- Energy Services
2) FNARX: Natural Resources
3) FDFAX: Consumer Staples
4) FSENX- Energy
5) FWRLX: Natural Gas
6) FSCHX: Chemicals
7) FSMEX: Medical Equipment
8) FSCGX: Industrial Equipment
9) FSDPX: Materials
10) FWRLX- Wireless
New Buys:
FSMEX: Medical Equipment
New Sells:
FSPTX: Technology
FSUTX: Utilities
Switches:
Back into Top 10:
FDFAX: Consumer Staples
To Honorable Mention:
FSCSX: Software & Computers
Honorable Mention (Holds):
FSCSX: Software & Computers
FSDAX: Defense & Aerospace
Notes:
According to S&P, Industry Momentum remains strong in these 10 sectors;
Gold
Oil & Gas Exploration & Production
Agricultural Products
Coal & Consumable Fuels
Health Care Services
Education Services
Integrated Oil & Gas
Industrial Gases
Oil & Gas Drilling
Oil & Gas Equipment & Services
Crude oil fell $2.79 to $88.96 on a weaker than expected jobs report indicating the U.S. economy may be heading into a recession. Recessions normally result in reduced demand for oil and select commodities.
The Week in Review:
Now that we have had a strong rally off of last week's lows, where do we go from here?
In the weeks ahead, we need to see more evidence if the recent bounce in the most beat up sectors was a knee-jerk rally, or the beginning of a base building process. The odds point strongly against a sustained uptrend without some kind of basing building activity to indicate the sellers had been exhausted.
As it stands, the S&P is facing stiff resistance in the 1370-1440 area. Investors who are looking at the current rally as a potential end to the bear market may find themselves disappointed.
We may have to extend our focus and timeframes from one month for the Fidelity Sector Funds, to 2 or 3 months. My guess is energy will remain a top spot in the long run, but in the near term lower prices may prevail.
As far as a potential turnaround, it seems that April and May looks like a reasonable estimate for an end to the recent Bear. Longer term, specifically 2009, the Fed will reverse course and begin raising interest rates, and this could lead to a longer term bear market.
US Equity Markets:
DJIA: 12,743.19/ last week 12,207.17 , up +536.02
S&P 500: 1,395.41/ last week 1,330.61, up +64.80
Nasdaq Composite: 2,413.40/ last week 2,326.20, up +87.20
The economic stimulus package giving consumers $300, $600, or even $1200 tax rebates will do little to revive the economy. The purpose of the rebates is more psychological than stimulative. Frankly, when the Government panics and begins handing out checks, I would think consumers would become more, and not less concerned.
On Tuesday, Switzerland's UBS announced they had written off $14 billion in sub prime mortgages.
On Wednesday, The ADP Employment Report showed a monthly (December 2007-January 2008) jobs increase of 130,000. In addition, the Federal Reserve (FOMC) cut the Fed Funds and the Discount Rate -50 basis points, bring the FF rate down 1.25% in two weeks.
Thursday, the Labor Department countered the ADP report as 69,000 new jobless claims showed up in the latest week, pushing the total to 375,000. Thomson had forecasted a gain of just 14,000 new claims to 315,000.
Bond insurer MBIA announced a $2.3 billion loss after writing-down some of the sub prime mortgage assets it guarantees. Fitch's downgraded the world's fourth-largest bond insurer's credit rating, Financial Guaranty, after FGIC failed to meet a deadline to raise capital.
The Commerce's Department's personal consumption and income data showed that personal spending has slowed. Consumer spending in December declined to its weakest performance since September 2006.
On Friday, Microsoft (MSFT) made a $44 billion dollar bid for Yahoo (YHOO).
Exxon Mobil (XOM) posted the highest quarterly earnings in corporate history. They want to tell you, Thanks!
For the week:
-Gold closed at $913.50/oz +2.80 for the week. Last week gold closed at $910.70, and was trading at $881.70 two weeks ago.
Gold shot up again as the U.S. dollar dropped after the Feds .75 basis point rate cut.
-The Commodities CRB Index closed at 364.34, up from 361.64 last week, and up from 360.87 two weeks ago. Three weeks ago the CRB hit a new high of 366.22. The previous high was on November the 7th at 359.05.
-Crude Oil closed at $88.96 /bbl down from $90.71 last week and up from $89.92 two weeks ago.
Oil prices are in a tug of war between a weaker dollar, and the potential for a weaker economy.
Like I had said last week, I wouldn’t be surprised to see an adjusted trading range of $75-$85/ barrel. This is why I refuse to overweight oil in the ETF portfolio despite of the current rankings in our system.
Adjusted for inflation, oil traded at $100/bbl a few weeks ago for the first time in history. This includes the highs set in the 1970s.
-The U.S. Dollar close at 75.48 down from 75.99 last week, and down from 76.37 two weeks ago.
Our current asset allocation are as follows;
65% Equities: (Normally 95%) Aggressive
55% Equities: (Normally 80%) Moderately Aggressive
45% Equities: (Normally 60%) Moderate
25% Equities: (Normally 40%) Moderately Conservative
10% Equities: (Normally 20%) Conservative
