Major Market ETFs Fall Back

Ulli Market Commentary Contact

There was some slippage in the market, and those exchange-traded funds (ETFs) representing the major indexes (DIA, QQQQ and SPY) pulled back a little.

After the recent rebound, it’s no surprise that that the markets took a breather, but it could also have been a case of exhaustion. In the last 23 trading sessions, for example, the Dow (DIA) had 10 with gains or losses of more than 100 points while volatility was on the upswing.

Given recent events, yesterday was a fairly calm day in the markets as news took on a more subdued tone. The Japanese seemed have to been gaining control of their troubled nuclear reactors as the allied forces were patrolling the Libyan skies.

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ETFs Pop On Merger News—SPY Gains 1.55%

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Who cared about global hotspots and disasters? Yesterday, it was all about merger mania and excitement over AT&T’s intention to buy T-Mobile U.S.A. for $39 billion. The markets jumped right out of the gate, as the chart above (courtesy of marketwatch.com) shows.

The ETF equivalent of the S&P 500, SPY, added +1.55%, slightly more than its underlying index, while small caps (VB) took top honors by racing ahead +2.22%.

Emerging markets participated as well and VWO gained +1.79%.

Oil prices, gold and energy ETFs like VDE were higher in light of the ongoing violence in Libya, and political unrest in Bahrain, while interest rates rose.

The Dow managed to climb back above its 12,000 milestone mark, while the S&P 500 just fell short of conquering the 1,300 level again.

Global markets rallied along with the U.S. as news reports about one of the Japanese power plants was positive in that the crisis seems to be getting slowly under control, although some crucial repairs might take another few days to complete.

Given all that, Wall Street seemed simply oblivious to some horrific domestic economic news.

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ETFs That Could Benefit From Japan’s Rebuilding Process

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Japan will need to bounce back from its tragedy; no question about it. Are there any ETFs you could invest in that cover the rebuilding effort? According to MarketWatch, “Buy what Japan needs to rebuild:”

The tragedy in Japan is still unfolding, and the extent of the devastation is uncertain, but there will come a time when the country will rebuild.

When that happens, the reconstruction effort will be massive and lengthy, and will involve both Japanese and international companies.

With that in mind, Standard & Poor’s highlighted some of the companies and industries that could see greater demand for their products and services as Japan recovers.

The disaster in Japan could impact supplies of crucial business components. Here’s what some companies are doing to deal with the situation.

S&P’s list of stocks and exchange-traded funds for investors to consider is a grim reminder of the gargantuan scale of work that lies ahead, yet underscores the fact that Japan will spend what it must to speed the recovery of its economy and its society.

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A New Yield Enhancing ETF (ALD)

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With interest rates hovering at all time lows, the generation of income remains a problem for many investors. Let’s take a look at “Wisdom Tree Launches Asia Debt ETF (ALD):”

Thursday marks the first day of trading for the WisdomTree Asia Local Debt Fund (ALD), an actively-managed ETF offering exposure to debt of a dozen developed and emerging Asia Pacific countries. The fund will invest primarily in local currency debt from issuers in South Korea, Indonesia, Malaysia, Singapore, Hong Kong, China, India, Thailand, Philippines, and Taiwan, as well as the developed markets of Australia and New Zealand. ALD will implement a tiered investment approach, with markets deemed to maintain larger and more liquid debt markets receiving higher weightings in the fund. A single country cap of 20% will be applied.

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Uranium ETFs Hammered

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In view of last week’s event in Japan, it’s only logical that “Uranium ETFs Slammed While Solar ETFs Rally in Wake of Japan Nuclear Blasts:”

It should come as no surprise that Uranium stocks are down with the predictable anti-nuclear backlash coming worldwide in the wake of the events unfolding in Japan. One question is whether the market reaction is overblown, as often happens, or whether this is just the beginning of the demise of nuclear power in the world. Seemingly, issues with various energy sources take turns attracting bad publicity.

In the US, natural gas has been in the news lately with concerns over fracking. We had the BP disaster in the gulf last year. Solar has never really come into its own without heavy subsidies, and prices at the pump have rising again amid turmoil in the Middle East. That had left a strong secular case for nuclear power and uranium ETFs. But everything has changed. Today’s market action in various energy classes pretty much says it all. Nuclear energy shares were slammed while solar rocketed up in an overall down day for global indices Monday:

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Should You Buy Any ETFs On Dips Now? How About EWJ?

Ulli trend line breaks Contact

Dip Buying was alive and well at least in one area of the market. I guess it was simply too tempting for investors to see a big drop in Japanese stocks and not get involved via an ETF like EWJ.

Index Universe reports that EWJ drew in $650 million in assets last Tuesday despite the broad sell off. While the Nikkei managed to bounce back nicely on Wednesday by gaining 5.68%, investors in EWJ were not as fortunate as that ETF dropped another 3.74%.

Sure, we all like to buy a beaten down ETF at the bottom and ride it up to the top, but is this really the right time?

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