Sluggish Day For The Indexes; A Look At The Volatility Of China ETFs

[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The S&P 500 and Dow Jones Industrial Average closed lower today as lackluster fourth-quarter results came in from Citigroup (C), Goldman Sachs (GS) and Best Buy (BBY). Best Buy (BBY) reported a sales decline for the holiday season, which came as a surprise to many investors.

The largest gainer of the day were Sarepta Therapeutics, Inc. (SRPT), up 40% after releasing positive trial data regarding its medical treatment for muscular dystrophy. Following second to Sarepta was the media measurement and distribution company Rentrak (RENT), which gained 26% after an announcement that CBS will be the first major network to host its advanced demographics rating service.

On the job front, weekly initial jobless claims fell by less than 1% to a seasonally adjusted 326,000. This is a further indication that the jobs market appears to be stabilizing. What’s more, unemployment is currently under 7% for the first time in six years, however, as we all know, a declining participation rate has been the greatest contributor.

China A-Shares ETF is a fairly new type of Chinese ETF investment. However, the lackluster economic scenario in China has not only crushed existing popular ETFs, but China A-Shares ETFs as well. While both Market Vectors China ETF (PEK) and PowerShares China A-Share Portfolio (CHNA) have tumbled more than 10% in the last one month, (ASHR) has fallen in the high single digits. A slowing economy and debt are mostly to blame.

Our 10 ETFs in the Spotlight meandered during this non-directional day and pretty much ended unchanged.

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features 10 broadly diversified ETFs from my HighVolume list as posted every Monday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.

In other words, none of them ever triggered their 7.5% sell stop level during this time period, which included a variety of severe market pullbacks but no move into outright bear market territory.

Here are the 10 candidates:

All of them are in “buy” mode meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).

Now let’s look at the MaxDD% column and review the ETF with the lowest drawdown as an example. As you can see, that would be XLY with the lowest MaxDD% number of -5.73%, which occurred on 11/15/2012.

The sell off in the month of June 2013 did not affect XLY at all as its “worst” MaxDD% of -5.73% still stands since the November 2012 sell off.

A quick glance at the last column showing the date of occurrences confirms that five of these ETFs had their worst drawdown in November 2012, while the other five were affected by the June 2013 swoon, however, none of them dipped below their -7.5% sell stop.

Year to date, here’s how the above candidates have fared so far: