Top ETF Performers

Let's take a look at some of this week's top- and bottom-performing ETFs and ETNs. Keep in mind that we cull the list to avoid duplicate sectors and we toss out Ultra, UltraShorts, 2X, 3X, Inverse, etc. ETFs.

Some of these names are lightly traded and may be fairly illiquid. Make sure that you research the holdings and design of these ETFs before considering any trade. In BigTrends ETF Options Trader (LINK) premium advisory service, Andrew Hart recommends specific real-time ETF Option trades on the best-moving, most-liquid ETFs.

insert1

This data comes from MSN Money (http://moneycentral.msn.com/investor/partsub/funds/etfperformancetracker.aspx?fam=&cat=&show=all&tab=&s=1w&o=d) as of 6/25/09.

There are some who believe that housing may lead us out of the current economic environment, as it was one of the main reasons we plunged into the economic doldrums. If this is the case, the SPDR S&P Homebuilders Trust (XHB) may be a smart investment - at least that is how it seems this week, as the ETF gained more than 4%. Unfortunately, the ETF's performance hasn't necessarily returned this week's love, as XHB has been in a rather solid downtrend since 2006. The shares are currently battling overhead resistance from their 10-month moving average. This trendline has acted as a barrier for the stock since the end of 2008, and it doesn't look like the moving average is ready to give up this role. Should the shares manage to break through this overhead resistance, they will run headlong into their 20-month moving average, which the ETF has never closed atop.

insert2

In addition, the XHB has lagged the broader market for the better part of its entire lifespan. The yellow line in the chart below represents the S&P 500 Index (SPX), and it shows that there are very few moments when the ETF outperformed the broader market. In fact, the chart shows how the housing sector led the SPX lower and the SPX is now looking to pull the housing market out of the depths.

insert3

The problem facing XHB goes further than simply technical performance. The ETF is home to luxury homebuilders like Centex (CTX), D.R. Horton (DHI), and KB Home (KBH). These stocks aren’t exactly the strongest performers out there. We will have to see if the broader market’s rally can instill any confidence in homebuilders. If that is the case, the XHB could be at an attractive entry point for a long position, a very long position.