Sector ETFs: More Downtrends Than Uptrends

It’s one thing to look at European ETFs and say, “Yeah, I’ll stay away from that hopeless region.” And one might even gloss over the downtrend for Vanguard All-World (VEU) by noting the exorbitant exposure to developed European equities.

Okay.

And perhaps one can be philosophical about the emerging market growth engine. Its motor needs a rest, right? Why? With China’s determination to remove excess monetary stimulus, and Brazil’s reliance on exporting to China, it’s not surprising to see Vanguard Emerging Markets (VWO) falter below a 200-Day MA, is it?

Lost in the excuse-making, however, is the fact that 5 out of 9 individual U.S. sectors have fallen below their long-term averages. In the SPDR Sector Select line-up, the unlucky 5 include: Financials, Utilities, Energy, Materials, and Health Care.

Granted, one can express a modicum of enthusiasm for SPDR Select Technology (XLK), SPDR Select Industrials (XLI), SPDR Consumer Discretionary (XLY) and SPDR Select Consumer Staples (XLP). Yet the scales may just be starting to tip in the bear’s favor.

(Note: I myself favor the notion that we are more likely to see our first 10%-15% correction in a 14 1/2 bull market. That said, there’s no reason to be heroic if your stop-loss limit orders hit and/or your asset falls below its 200-day MA.)

Here are the current YTD % Gains/Losses for each of the U.S. sectors:

Approximate YTD Returns For Sector ETFs (Through 5/18/10)
					Approx YTD
Industrials Select Sector SPDR (XLI)					10.5%
Consumer Discretion Select SPDR (XLY)					9.6%
Financials Select Sector SPDR (XLF)					3.6%
Consumer Staples Select SPDR (XLP)					3.5%
Energy Select Sector SPDR (XLE)					-3.1%
Technology Select Sector SPDR (XLK)					-3.2%
Utilities Select Sector SPDR (XLU)					-4.3%
Health Care Select Sector SPDR (XLV)					-4.3%
Materials Select Sector SPDR (XLB)					-5.9%

Disclosure Statement: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above.The company receives advertising compensation at the ETF Expert web site from Invesco PowerShares Capital Management, LLC and Geary Advisors, LLC. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.