ETF Expert

Two weeks ago, I noted that the best"cash-on-hand" ETFs held technology companies. Yet the idea of gaining access to corporations with little debt and lots of money is predicated on the need to get through a lengthy and difficult credit crisis.

On the other hand, what if we're 90% of the way through the credit crisis? What if banks do become capable of lending more freely to businesses? What if housing is pretty close to a bottom? What if the consumer starts spending a bit more… a bit quicker than most believe is possible?

Regardless of your "take" on the world economy or the credit mess, investors are speaking with their allocation choices. And many of them have been choosing semiconductors.

You can talk about falling demand for semiconductors. You can hypothesize that the global recession will last much longer than anyone is anticipating. Yet it's hard to argue with the scoreboard.

Indeed, all of the "major" semiconductor ETFs have substantial Q1 gains:

And there's more. If you want to know whether a particular segment of the economy is rising or falling, then you're going to need to know whether the majority of stocks in an ETF are climbing or not.  

Over the last 3 months of trading (12 weeks), I was only able identify 8 stock ETFs with positive breadth; that is, only 8 stock ETFs held more net advancers over the 3 months than net decliners. All 3 of the semiconductor ETFs mentioned above had positive price breadth. Other noteworthy price breadth winners include Market Vectors Gold Miners (GDX) and the Energy SPDR (XLE).

Why stop there? What about the seemingly impossible… like more stocks hitting 52-week highs than 52-week lows in the ETF. Surprisingly enough, there are 2 ETFs with this distinction over a sustained 3-month period:  Market Vectors Gold Miners (GDX) and State Street Semiconductors (XSD).

State Street Semiconductors (XSD) has an approximate price-to-book ratio of 1.3, and that's not too shabby for tech stocks. Moreover, with copper hitting 4-month highs, and China's stock market showing potential signs of sizzle, semis may have found the sweet spot.

If you'd like to learn more about ETF investing… then tune into "In the Money With Gary Gordon." You can listen to the show "live" or via podcast or on your iPod at this link.

Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Advisor with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.