5 ETFs to watch this week

Keep an eye on funds tracking silver, agriculture, construction, retail and the Dow.

By TheStreet Staff May 16, 2011 10:13AM

Image: Watching ETFs (© Don Carstens/Jupiterimages)By Don Dion, TheStreet


Here are five exchange-traded funds to watch this week.


1. iShares Silver Trust (SLV)


As forecast in last week's "5 ETFs to watch," commodities have continued to behave in a volatile manner. The bullion-backed SLV's performance was particularly bipolar. During the early part of the week, SLV managed to pull off gains, but its strength was short-lived. By Friday, it had retreated to the previous week's lows.


Silver will continue to generate press in the week ahead as market watchers debate and discuss the longevity of the current commodities shakeup and look for ways to navigate it.


Although I continue to view precious metals as a promising long-term play, I urge investors to avoid being overly exposed to this asset class. By keeping exposure to materials like gold and silver small and concentrated, you can benefit from their long-term defensive nature while protecting against short-term volatility.


2. Market Vectors Agribusiness ETF (MOO)


Like SLV, agriculture-related ETFs will be in the spotlight as commentators and analysts investigate ongoing volatility. The equity-backed MOO will be of particular interest on Wednesday, when industry leader Deere (DE) reports its earnings. DE is MOO's second-largest holding and accounts for more than 8% of its assets.

In past quarters, the farming-equipment maker has been an impressive earnings performer, beating analyst estimates. It will be interesting to see whether it can follow through with another strong report.


3. iShares Dow Jones U.S. Home Construction Index Fund (ITB)


A variety of real-estate-related data points are scheduled to be released this week, thrusting the residential housing market and homebuilders into the spotlight. On top of the housing-starts and existing-home-sales data that are slated for Tuesday and Thursday, respectively, Home Depot (HD) and Lowe's (LOW) will report their earnings reports during the first half of the week.


ITB and the SPDR S&P Homebuilders ETF (XHB) will likely be exciting to watch, though I continue to have reservations about real estate. The iShares Cohen & Steers Realty Majors Index Fund (ICF) remains my fund of choice for this region of the market.


4. SPDR S&P Retail ETF (XRT)


Discount retail Goliath Wal-Mart (WMT) is slated to report quarterly earnings Tuesday. On top of providing investors with information on the state of the consumer, this report typically signifies the end of the earnings season.


Aside from Wal-Mart, investors should closely follow Target (TGT), Limited Brands (LTD), TJX Companies (TJX), Abercrombie & Fitch (ANF) and Sears Holdings (SHLD).


The consumer continues to be resilient. In the face of worries over rising costs, the XRT has managed to stick to its upward trajectory, establishing new highs for the year. 


5. SPDR Dow Jones Industrial Average ETF (DIA)


The large-cap-dominated Dow Jones Industrial Average ($INDU) has staged an impressive run-up recently. Over the past 30 days, shares have outpaced small- and mid- cap-linked ETFs such as iShares Russell 2000 Index Fund (IYM) and the iShares S&P 400 Mid Cap Index Fund (MDY).

It is too soon to tell whether the business cycle has shifted in favor of large and mega-caps. However, in the event that the market runs into turmoil, the size and stability of companies like IBM (IBM), Caterpillar (CAT) and McDonalds (MCD) will likely prove popular, boosting the appeal of funds like DIA.


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