Sector Week-in-Review: Energy Drags Market Down

Nick Perry (Schaeffer's Investment Research) submits: Last week showed a mostly quiet picture with the Oil Service HOLDRS Trust (OIH) and the US Oil Fund (USO) posting the largest gains. This week we find a skew to the downside:

click to enlarge

Only three ETFs from my list were able to show a gain on the week. The largest of those moves, made by the streetTRACKS Gold (GLD) ETF, was less than one percent. On the downside we see that oil services reversed last week's gains, and then some, as the OIH dropped more than five percent. In broad strokes, the bottom half of the graph was dominated by energy, materials, and transports.

For a longer-term perspective, the bullets below show how the ETFs listed above have faired over the last six-months, prior to this week:

Prior Six-Month Returns for This Week's Top Performing Sector Exchange Traded Funds:

* streetTRACKS Gold (GLD) +6.5%
* Regional Bank HOLDRS (RKH) +11.4%
* iShares Lehman 1-3 Year Bond (SHY) +0.8%
* iShares Lehman Aggregate Bond Fund (AGG) +2.8%
* SPDR-Health Care (XLV) +11.5%
* iShares Lehman 7-10 Year Bond (IEF) +3.7%
* SPDR-Consumer Staples (XLP) +9.4%
* SPDR-Financial (XLF) +15.5%
* PS Leisure & Entertainment (PEJ) +16.4%
* iShares DJ U.S. Healthcare (IYH) +11.5%
* PS Media (PBS) +16.7%
* PS Aerospace & Defense (PPA) +15.1%

Prior Six-Month Returns for This Week's Bottom Performing Sector Exchange Traded Funds:

* PS WilderHill Clean Energy (PBW) -1.8%
* PS Semiconductors (PSI) +5.4%
* iShares C&S Realty Majors (ICF) +24.8%
* Internet HOLDRS (HHH) +6.1%
* SPDR-Energy (XLE) +20.0%
* iShares DJ U.S. Basic Materials (IYM) +16.6%
* iShares DJ U.S. Energy (IYE) +22.3%
* iShares GS Natural Resources (IGE) +17.3%
* iShares DJ Transportation Average (IYT) +1.1%
* PS Energy Exploration & Production (PXE) +22.0%
* PS Oil Services (PXJ) +15.1%
* Oil Service HOLDRS (OIH) +12.1%

All it takes is a quick scan of the numbers above to see it is littered with double digit gains. We head toward the end of 2006 with the broad market indices in strong uptrends and the sector view showing strength in many groups.

One ETF to keep your eye on in the coming year is the Select Sector SPDR Financial Fund (XLF) . As the monthly chart below shows, the XLF has broken above resistance near 30 and is in the midst of a long-term uptrend:

Comments

[CrossProfit]

"Oil service companies may get hit harder than the rest of the market but should recover in 2007." (posted 11/17/06)
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Merry Christmas and a happy new year to all.
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