The worst-performing exchange traded funds in May, which largely bet against commodities, might be good investments for short sellers who are bullish on the stock market.
Of the 25 biggest losers, the first 24 use inverse strategies that cause them to gain value as their underlying index falls. The remaining fund tracks an index that measures bearishness. If the stock market rebounds significantly, a short position in these funds could generate big gains. ETFs to Short if You’re a Stock-Market Bull
The worst-performing exchange traded funds in May, which largely bet against commodities, might be good investments for short sellers who are bullish on the stock market.
Of the 25 biggest losers, the first 24 use inverse strategies that cause them to gain value as their underlying index falls. The remaining fund tracks an index that measures bearishness. If the stock market rebounds significantly, a short position in these funds could generate big gains. Real Estate Funds Jump on Housing Hopes
For the five trading days ending June 4, the average real estate fund advanced 7.5%, excluding inverse funds that sell short the property market.
The National Association of Realtors reported this week that April pending home sales jumped 6.7% as distressed sellers lowered prices to move foreclosed and pre-foreclosure properties. Residential construction even edged a bit higher, up 0.6%, as part of an overall construction increase of 0.8% partially due to the U.S. government's $787 billion fiscal stimulus package.
The best-performing real estate fund this week is the LMP Real Estate Income Fund(RIT) building an 18% return. Top holdings saw gains of 33% in Glimcher Realty Trust(GRT), 26% in Macerich(MAC) and 22% in Extra Space Storage(EXR).
Full Story: http://www.thestreet.com/story/10510092/1/real-estate-funds-jump-on-housing-hopes.html Junk Bonds Back from the Dead (ETF-HYG)
Junk bonds have come back from the dead — and then some. Of all the asset classes, you’d think the market for debt from financially fragile companies wouldn’t fare well during a “credit crisis.” In fact, we’d suspect it would be one of the last asset classes to recover. But no, anything is possible in 2009… Check the chart of HYG, an ETF that tracks the “distressed debt” market.
Full Story: http://dailyreckoning.com/junk-bonds-back-from-the-dead/ 5 Months, 5 Currency ETFs… Double Digit Percentage Gains!
At last count, you could invest in 15 different currencies through 24 unique ETFs. The yen and the euro have more than their fair share of possibilities on investments like the Euro Currency Trust (FXE), the Ultra Euro ProShares (ULE) and the UltraShort Euro ProShares (EUO).
Yet in the first 5 months of the year, the 5 currency ETFs with the highest returns seem to share several things in common. First, each represents a country that boasts higher interest rates than the yen or the U.S. dollar.
Full Story: http://www.etfexpert.com/etf_expert/2009/06/etf-expert-5-months-5-currency-etfs-double-digit-percentage-gains.html Another way to profit from oil’s rebound (XES)
"Drill baby, drill" may have failed as a campaign slogan, but the mantra appears to be working for investors.
The S&P Oil & Gas Services ETF (XES) has jumped 57% over the last three months, outperforming the S&P 500 (SPX) by 25%. Service and drilling stocks, which were pounded last year as production companies made steep cuts, are riding the wave of near-$70 crude. A (Popular) ETF Down 97%??? (FAZ)
There’s a lot of interesting information in the latest report, including a complete table showing assets and inflows by ETF provider. Of all the data points covered, however, one in particular caught my eye.
So far this year, the Direxion Financial Bear 3x ETF (NYSE: FAZ) has attracted the second-greatest inflow of any ETF on the market, at $4.6 billion. Only the SPDR Equity Gold (NYSE: GLD) has done better, pulling in $11.8 billion.
Despite the massive inflows, FAZ ended May with just $1.6 billion in assets. Such a gap suggests that investors in the fund have experienced terrible returns. Gold and silver fall as jobs data lessen metals’ appeal (GLD, SLV)
Gold and silver futures fell sharply Friday, extending their weekly losses as an upbeat U.S. employment report boosted hopes for an economic recovery and served to reduce the safe-haven investment appeal of precious metals.
Nonfarm payroll fell 345,000 in May, the Labor Department reported, but this drop was much less than the 500,000 expected by analysts surveyed by MarketWatch. The decline in payrolls was the smallest since September. A stronger dollar also weighed on commodities. Bank Stocks Could “Double or Triple” from Here, Says Doug Kass (XLF, FAS)
Even after their huge rally from the March lows, bank stocks represent the "single-greatest opportunity" from the long side, according to Doug Kass, president of Seabreeze Partners.
Bigger is better within the sector: shares of some so-called TARP banks could "double or triple in the next three-to-four years," Kass predicts, making a notable exception of Citigroup. Kass is long several other TARP banks, including SunTrust, Bank of America, Wells Fargo, PNC and State Street, and says these are "investments" not trades. Why You Should Be After QQQQ
Whether you love it or hate it, the PowerShares QQQ(QQQQ) is one of the most highly monitored and frequently traded ETFs in the market today. This benchmark ETF tracks the capitalization-based Nasdaq 100 Index and is composed of the largest domestic and international non-financial companies listed on the Nasdaq.
While QQQQ has a high correlation with other large-cap growth ETFs, like the iShares S&P 500 Growth Index(IVW) and Vanguard Growth ETF(VUG), key differences have helped QQQQ emerge as one of the most popular ETFs in the market today. To call the QQQQ "tech heavy" is an understatement. According to issuer PowerShares, the QQQQ has a 62.99% tech allocation. The second and third largest sectors in the QQQQ are health care and consumer discretionary, comprising 16.56% and 12.59% of the fund, respectively. Mutual Fund Doomsday Clock(TM) Launched
The mutual fund is under duress and fund executives and their marketers need to take steps now to prop it up, that according to a recently released white paper, How to Save the Mutual Fund (Before It's Too Late), authored by Dave Swanson, Founder and Managing Principal of SwanDog Strategic Marketing.
In the paper, Swanson lauds the mutual fund as the financial industry's "Grand Dame" over the past 20 years, but notes that "the old broad" is now 85 years old and in need of an extreme makeover to keep it viable. ETF Investors Buy in May
ETF investors seemingly ignored the old stock market adage: "Sell in May and go away." In fact, the ETF industry posted its best month of the year, in terms of net inflows, attracting more than $14 billion in new assets during the month. For some context, this compares with May 2008 net ETF inflows of about $3.3 billion. Leveraged and inverse ETFs accounted for about 11% of the month's net inflows, versus 27% last month.
The impressive inflows of the past month helped push the industry's year-to-date total net inflows to more than $20.5 billion. With the markets showing resiliency in holding on to gains from its recent rally, we're seeing investors start to regain their appetites for risk. A sign that optimism about the economy is growing can be seen in the bond markets; the yield on the 10-year Treasury note is now at its highest level since November, rising almost a complete percentage point since the end of April. How An ETF Can Make You 20 to 30 Times Your Money on the Coming Inflation
Hedge fund legend Julian Robertson is betting the farm against long-dated US Treasurys. As Notes readers will be aware, we have been banging the drum on the vulnerability of long-dated US debt for over a month now. But Robertson, of Tiger Management fame, has a different way to make this short long-term Treasurys play (hat tip Market Folly).
Robertson is shorting long-dated US debt using something called a steepener swap play. Although the mechanism of this trade may be unfamiliar, at heart it’s a simple bet on inflation. Winning Oil Services Stocks (ETF-OIH)
Let's be honest, as drivers and consumers, we hate hearing news that the price of oil is rising. Higher crude prices mean high gas prices and a little more of a pinch every time we head to the local gas station. Fortunately, there is a way to ease the sting of higher gas prices and even profit from them. Oil services stocks are deeply tied to the price of oil when it comes to stock performance, and since the price of oil is on the rise, now may be the time to take a look at this sector.
And don't worry if you don't want to individually own all of the names mentioned in the following article, because there's an ETF for you. The Oil Services HOLDRs ETF (AMEX: OIH) holds all of the names we're going to highlight, and many more. Its chart since the beginning of March is a thing of beauty, as the S&P 500 is up 30% since March 2, and the OIH is up over 60%. Will The ‘New Dow’ Shatter The 200-Day Moving Average? (ETF-DIA)
For the first time in over a year, the Dow is actually challenging the 200-day moving average. Adding two new components to the Dow may provide the boost needed to break above this significant trend line. Would such a break, however, mean that the worst is over, or is another collapse still possible? It doesn’t happen often, but when it does; it’s kind of a big deal – changes to the Dow Jones (NYSEArca: DIA).
Those changes, however, are becoming more frequent. On September 22, 2009, Kraft Foods (NYSE: KFT) replaced American International Group (NYSE: AIG).
Ever since then, the Dow has been underweighted in financials. The reduced financial exposure explains why the Dow has performaned better than the S&P 500 (NYSEArca: SPY), over the past year or so. The Financial Select Sector SPDRs (NYSEArca: XLF) were the worst performing sector, up until the rally from the March lows. 
