Thu 14 Sep 2006
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Over the past 30 days, market momentum has decidedly shifted toward the technology sectors. That usually happens in the early stages of a major market rally. Combined with other indications of underlying market strength, this is providing traders and investors with hope for a solid advance in the final four months of 2006.
In spite of positive gains in most sectors over the past month, a few analysts are still on the sidelines, viewing the current move with distrust. But this move is providing every indication that it is real and could be substantial. For example, there are currently about 300 exchange-traded funds (ETFs), representing virtually every market sector and every major index. Over the past month, only 40 ETFs have had a negative return. Most of those are energy or natural resource funds or funds that short various market indices.
In other words, this is a broad-based move that appears to be building momentum.
The technology ETFs have produced gains of 8% to almost 21% over the same one-month period. While that’s impressive, it might not continue much longer. While the tech sectors tend to lead early during bull rallies, other sectors usually gain strength as the bull market matures. Those would include sectors like transportation, health care, insurance, brokerages, real estate, telecommunications and more.
Below is a list of the top 100 ETFs and their returns over the past month. (The EXTRADED designation merely identifies the investment as an ETF.)
| Symbol | Name | Return 08/11/2006-09/13/2006 |
| IIH | EXTRADED Internet Infrastructure (HLDRS) | 20.89% |
| QLD | EXTRADED Ultra QQQ (ProShr) | 18.45% |
| XSD | EXTRADED Semiconductor (SPDR) | 15.98% |
| PXQ | EXTRADED Dyn Networking (PowShr) | 14.57% |
| IGW | EXTRADED GS Semiconductor (iS) | 13.99% |
| IGN | EXTRADED GS Networking (iS) | 13.85% |
| QTEC | EXTRADED NASDAQ 100 Tech (1Trust) | 13.31% |
| PSI | EXTRADED Dyn Semiconductors (PowShr) | 12.65% |
| SMH | EXTRADED Semiconductor (HLDRS) | 12.51% |
| BDH | EXTRADED Broadband (HLDRS) | 12.42% |
| MTK | EXTRADED MorganStanley Technology (stTr) | 12.01% |
| FDN | EXTRADED DJ Internet (1Trust) | 11.38% |
| IGM | EXTRADED GS Technology (iS) | 11.35% |
| PEJ | EXTRADED Dyn Leisure & Entertain (PowShr) | 11.35% |
| IYW | EXTRADED DJ US Technology (iS) | 11.08% |
| VGT | EXTRADED Vanguard Information Tec (VIPER) | 11.08% |
| ITB | EXTRADED DJ US Home Construction (iS) | 10.98% |
| IGV | EXTRADED GS Software (iS) | 10.91% |
| HHH | EXTRADED Internet Holdings (HLDRS) | 10.68% |
| IAH | EXTRADED Internet Architecture (HLDRS) | 10.65% |
| PHW | EXTRADED Dyn Hardw&Consum Electr (PowShr) | 10.51% |
| IXN | EXTRADED S&P Global Information Tech (iS) | 10.10% |
| XLK | EXTRADED Technology (SPDR) | 9.79% |
| QQEW | EXTRADED NASDAQ 100 Equal Weigh (1Trust) | 9.56% |
| XHB | EXTRADED Homebuilders (SPDR) | 9.54% |
| BHH | EXTRADED B2B Internet (HLDRS) | 9.50% |
| QQQQ | EXTRADED NASDAQ 100 | 9.39% |
| PSJ | EXTRADED Dyn Software (PowShr) | 9.37% |
| EWD | EXTRADED MSCI Sweden (iS) | 9.34% |
| OOO | EXTRADED O Strip (SPDR) | 9.16% |
| SWH | EXTRADED Software (HLDRS) | 8.96% |
| PXN | EXTRADED Lux Nanotech (PowShr) | 8.79% |
| XRT | EXTRADED Retail (SPDR) | 8.78% |
| ICF | EXTRADED Cohen & Steers Realty Major (iS) | 8.60% |
| PBE | EXTRADED Dyn Biotech & Genome (PowShr) | 8.54% |
| PTE | EXTRADED Dyn Telecommunicat&Wire (PowShr) | 8.36% |
| ONEQ | EXTRADED Fidelity NDQ Composite | 8.30% |
| MVV | EXTRADED Ultra MidCap 400 (ProShr) | 8.28% |
| WMH | EXTRADED Wireless (HLDRS) | 8.22% |
| DDM | EXTRADED Ultra Dow 30 (ProShr) | 8.18% |
| SSO | EXTRADED Ultra S&P 500 (ProShr) | 8.14% |
| PMR | EXTRADED Dyn Retail (PowShr) | 8.10% |
| IWO | EXTRADED Russell 2000 Growth (iS) | 8.07% |
| PWO | EXTRADED Dyn OTC (PowShr) | 8.03% |
| RWR | EXTRADED DJ Wilshire REIT (stTr) | 8.02% |
| IYR | EXTRADED DJ US Real Estate (iS) | 7.99% |
| VCR | EXTRADED Vanguard Consumer Discr (VIPER) | 7.97% |
| VNQ | EXTRADED Vanguard REIT (VIPER) | 7.81% |
| IWC | EXTRADED Russell MicroCap (iS) | 7.79% |
| IYT | EXTRADED DJ Transportation Average (iS) | 7.73% |
| JKK | EXTRADED Morningstar Small Growth (iS) | 7.67% |
| IWM | EXTRADED Russell 2000 (iS) | 7.62% |
| XLY | EXTRADED Consumer Discretionary (SPDR) | 7.62% |
| JKJ | EXTRADED Morningstar Small Core (iS) | 7.49% |
| FBT | EXTRADED Amex Biotechnology (1Trust) | 7.47% |
| IYC | EXTRADED DJ US Consumer Cyclical (iS) | 7.43% |
| RTH | EXTRADED Retail (HLDRS) | 7.39% |
| KIE | EXTRADED KBW Insurance (stTr) | 7.30% |
| IWN | EXTRADED Russell 2000 Value (iS) | 7.27% |
| FDM | EXTRADED DJ Microcap (1Trust) | 7.19% |
| PKB | EXTRADED Dyn Building & Construc (PowShr) | 7.15% |
| VOX | EXTRADED Vanguard Telecom Service (VIPER) | 7.14% |
| XBI | EXTRADED Biotechnology (SPDR) | 7.10% |
| PZI | EXTRADED Zacks MicroCap (PowShr) | 7.07% |
| IJS | EXTRADED S&P 600 SmallCap Value (iS) | 6.97% |
| VBK | EXTRADED Vanguard SmallCap Growth (VIPER) | 6.91% |
| JKL | EXTRADED Morningstar Small Value (iS) | 6.91% |
| DSG | EXTRADED DJ Wilshire SmallCap Grow (stTr) | 6.87% |
| IAI | EXTRADED DJ US Broker Dealers (iS) | 6.71% |
| JKG | EXTRADED Morningstar Mid Core (iS) | 6.65% |
| IHF | EXTRADED DJ US Health Care Provider (iS) | 6.60% |
| EWN | EXTRADED MSCI Netherlands (iS) | 6.58% |
| RZV | EXTRADED S&P SmallCap 600 Pure Va (Rydex) | 6.57% |
| PWJ | EXTRADED Dyn MidCap Growth (PowShr) | 6.54% |
| PZJ | EXTRADED Zacks SmallCap (PowShr) | 6.53% |
| IAK | EXTRADED DJ US Insurance (iS) | 6.46% |
| VB | EXTRADED Vanguard SmallCap (VIPER) | 6.44% |
| FPX | EXTRADED IPOX-100 (1Trust) | 6.40% |
| JKH | EXTRADED Morningstar Mid Growth (iS) | 6.30% |
| DES | EXTRADED SmallCap Dividend (WTree) | 6.17% |
| DSC | EXTRADED DJ Wilshire SmallCap (stTr) | 6.12% |
| JKE | EXTRADED Morningstar Large Growth (iS) | 6.11% |
| PBS | EXTRADED Dyn Media (PowShr) | 6.10% |
| IJR | EXTRADED S&P 600 SmallCap (iS) | 6.08% |
| KCE | EXTRADED KBW Capital Markets (stTr) | 6.08% |
| RPG | EXTRADED S&P 500 Pure Growth (Rydex) | 6.07% |
| EMG | EXTRADED DJ Wilshire MidCap Growth (stTr) | 6.05% |
| IWZ | EXTRADED Russell 3000 Growth (iS) | 6.04% |
| IWP | EXTRADED Russell MidCap Growth (iS) | 6.04% |
| IBB | EXTRADED NASDAQ Biotechnology (iS) | 5.92% |
| VBR | EXTRADED Vanguard SmallCap Value (VIPER) | 5.90% |
| IWF | EXTRADED Russell 1000 Growth (iS) | 5.80% |
| PWT | EXTRADED Dyn SmallCap Growth (PowShr) | 5.77% |
| IYJ | EXTRADED DJ US Industrial (iS) | 5.75% |
| VXF | EXTRADED Vanguard Extended Mkt (VIPER) | 5.73% |
| VIS | EXTRADED Vanguard Industrials (VIPER) | 5.72% |
| XPH | EXTRADED Pharmaceuticals (SPDR) | 5.72% |
| PIC | EXTRADED Dyn Insurance (PowShr) | 5.72% |
| IYZ | EXTRADED DJ US Telecom (iS) | 5.65% |
| TTH | EXTRADED Telecom (HLDRS) | 5.61% |
Investors should also keep in mind that oil prices have fallen sharply in recent weeks. Those lower oil prices are expected to continue for some time and should help keep inflation controlled. That means there will be less pressure on the Federal Reserve to raise interest rates again anytime soon. The next meeting of the Federal Open Market Committee is less than a week away and obviously Wall Street is feeling more comfortable about the declining likelihood of another interest rate hike.
Many individual funds are trading at their highest levels of the year. That is still not the case for major indices like the Dow, S&P 500 and the Nasdaq. But even these indices are at four-month highs and within striking distance of the highs reached back in April. Those who are not fully invested yet probably still have time to jump in. This market advance has all the signs of a rally that should develop into a longer trend.
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