Latest news, trends and ideas for investing with exchange traded funds | ETF Commentary

Traders have recently been buying put options on some popular exchange traded funds according to the WSJ‘s Tennille Tracy.

In the article Buyers Like Options on ETFs,Tracy writes that traders are taking advantage of a drop in volatility levels to buy January 2011 put options on the Technoogy Select Sector SPDR Fund (XLK).   Other ETFs with active put buying include the Health Care Select Sector SPDR Fund (XLV) and the Consumer Discretionary Select Sector SPDR Fund (XLY).

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Technical analysts are bullish due to the breadth of the recent rally according to the WSJ‘s Geoffrey Rogow.

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In a recent article in Kiplinger’s Personal Finance Magazine, associate editor Amy Bickers looked at Stocks to Buy Before the Recovery.

Bickers notes that in the last recovery, retailers like Nordstrom and Penney shot up 60% in the 6 months after the recession of 2001 ended. Rather than buy individual retailers, she recommends State Street’s Consumer Discretionary Select Sector SPDR (XLY), that has holdings in big-store chains and also in brand names, such as Disney and Nike.

To benefit from a pick-up in business spending, Bickers suggests ETFs that focus on materials or equipment makers. Vanguard Materials ETF (VAW) owns DuPont, Dow Chemical, Alcoa and seed producer Monsanto. Another industrial play is the Vanguard Industrials ETF (VIS).

Since technology also usually leads a recovery, Bickers includes iShares Dow Jones U.S. Technology Sector ETF (IYW) in the article.

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