BigTrends

Overall February's ETF Trend was more bullish than January's with all three major index ETFs gaining ground. Here are the quick take-aways from February:

--In contrast to January Asian markets experienced the heavier selling in February with Japan and Taiwan leading the weakness.

--January's standout was Regional Banks and February is no different with strength spreading to all financial another month of gains (XLF, RKH, KRE)

--Energy and Commodity Based ETFs continued to show major weakness with XLE, XOP, OIH, UNG and SLV all showing losses.

--If any leaders emerge in Energy and Commodities look towards Gold and Oil as GLD and USO were a couple of the bright spots.

--With International and Global ETFs closing decisively bearish for a second month we'll be watching if they lead major US indices lower. 

--The strongest US sector is consumer discretionary led by retailers (XRT)

Let me know if you see anything else in the comments below!

ETF Heatmap (1 Month Performance) - Click to Enlarge

The relationships between the US Dollar, Gold, the Stock Market, and Bonds is a complex, inter-related one that changes over time.  However, there are noticeable trends and "push/pulls" that one can spot in a price performance chart.

Take a look at this following chart of the PowerShares US Dollar Index (UUP) and the SPDR Gold Trust (GLD):



What you can see clearly here is that the down move in the Dollar that began in late-2008 was in tandem with a big rise in Gold.  The Gold move peaked in early December of last year.  Since that time, the Dollar (represented by the UUP) has been on a steady uptrend versus its basket of world currencies (Euro, Yen, Pound, Canadian Dollar, Krona, Franc).  Meanwhile, GLD is heading lower.

The simple conclusion I draw from this chart is that continued strength in the UUP/Dollar will lead to further downside in GLD/Gold.  The relationship between the US Stock Market and the Dollar is not as strong currently in my analysis.

You may well think that the Dollar will eventually resume its downward slide, and Gold will have another big upleg.  But "don't fight the tape" as Jesse Livermore would say -- and currently the UUP is showing strong technicals.

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Take a look at the ETF heat map below - we're looking at January performance (or YTD) so this gives you a solid idea of the winners and losers so far in 2010. I suspect there is a positive correlation between the overall market and individual sectors with respect to the January Barometer. That said, we may be looking at the strongest and weakest sectors of the year.

Here's what I see (sound off in the comments below if you notice anything else!): (Click to enlarge pic)

• 90% of World Market Are Negative (Majority of Green are Short/Inverse ETFs)
• The Worst Performing Group Looks Like Basic Materials (XLB, GDX, XME, SLX)
• The BEST Performing Group is REGIONAL BANKS (KRE, RKH, IAT)
• Other Notable OUTPERFORMERS Include Japan (EWJ), Homebuilders (XHB), Russia (RSX), Global Shipping (SEA)

ETF HEATMAP (Close of January 2010/YTD) From FinViz

It's that time of year again when investors start adjusting the rear-view [investment] mirror as they look forward to a new year of money making trends. It's a good time to peruse the free analysis available, all-the-way from the top investment banks down to your local advisor, but be selective and filter out the noise because a lot can be misleading or incorrect.

That said, I found this handy little document called, Goldman Sachs Global Viewpoint - Top Trade Ideas for 2010, which covers Goldman's (GS) top 8 trade ideas for 2010. In my view, it's well worth the time to scroll through the short 7 page analysis, there are some ideas that I agree with - for example, Trade #2 is LONG RUSSIA Equities (RSX), this points towards the strength in BRIC countries (BTW, Goldman coined that acronym back in 2001), however, I would expect Brazil (EWZ) to be a larger beneficiary of BRIC investments next year. I'll be covering the details of Brazil in BigTrends 2010 Outlook due out next week (sign up for a free BigTrends Insider account to receive)

Tell us what you think about these trade ideas below, I'm especially interested in the 12 month volatility play...

It looks like traders are still digesting Friday's job news as the market is in a holding pattern with major indices mixed. Gold continued to move in big ways and oil may be breaking out of it's recent bear trend (Are Gold and Oil set to revert back to their means? GLD / USO Pair Trade??)

Check out this 5 minute video on GLD, OIL, and UUP and let me know what you think

Much focus and attention these days among investors, traders, politicians, and the media is on China.  With good reason.  Demographics and a growing economy may make this the "Century of China".

However, there is another Asian economy and market that you shouldn't forget about:  India.  This is a country with a massive population and growing education and business base.  Incremental increases in the growth of lower and middle classes in countries like India and China can have earthquake-like fiscal effects.

Take a look below at the relative performance of the Powershares India ETF (PIN) versus the iShares Xinhua China Index (FXI).  You might be surprised to see that the India ETF PIN has outperformed the China ETF FXI since the March 9th, 2009 market bottom.

FXI vs PIN Price Performance Chart

Here are the top holdings of the PIN ETF (as of 9/30/09):