5 ETFs to watch this week

As third-quarter earnings season kicks off, exchange-traded funds in agriculture, solar energy and mining may be on the move.

By TheStreet Staff Oct 4, 2010 1:00PM

By Don Dion, TheStreet

 

ETF investors will be watching early earnings reports as the third-quarter earnings season kicks off this week. Among the exchange-traded funds that could be affected are those in the agriculture and solar energy sectors.

 

September is typically viewed as a volatile period for market watchers as investors return from their summer vacations and settle down for the closing months of the year.

 

This year, however, September was anything but bleak. The Dow Jones Industrial Average ($INDU), S&P 500 ($INX) and Nasdaq ($COMPX) all soared, clocking in noteworthy gains. Despite floundering at the close of the month, U.S. stocks managed to score their strongest September gains in more than 70 years.

 

With September behind us, investors are now gearing up for the homestretch. On Thursday, Alcoa (AA) will kick of the third-quarter earnings season. While macroeconomic factors persist, AA and the rest of the companies reporting earnings in the coming days and weeks will hugely influence how October plays out.

2. Market Vectors Agribusiness ETF (MOO)

In the third quarter, it seemed like things were going just right for investors with stakes in the agriculture industry. Droughts threatening Russia's wheat crops, coupled with increasing demand in China provided an ideal scenario to send food futures prices higher, leading funds such as PowerShares DB Agriculture ETF (DBA) to strong gains.

 

In addition, the Potash of Saskatchewan (POT) - BHP Billiton (BHP) saga helped power agriculture equities higher as well.

 

As we enter October, MOO investors will have eyes set on earnings reports slated to come from top holdings, Mosaic (MOS) and Monsanto (MON). Together, these two firms account for 14% of the fund's total portfolio.

 

3. Guggenheim Solar Energy ETF (TAN)

The solar energy industry continues to be a volatile region of the market. However, last week TAN managed to score some impressive gains, jumping to levels last seen prior to the heavy sell-off it suffered in May.

 

It will be interesting to see if the solar ETF can capitalize on last week's gains. However, I would caution investors against taking on large exposure to TAN for the long run.

 

Ongoing economic turmoil facing regions of the developed world still threaten to put pressure on the subsidies companies involved in the production of solar energy rely on to remain profitable. Until macroeconomic storms recede, the threat of a downturn from TAN persists.

 

4. Market Vectors Gold Miners ETF (GDX)

Despite the market's strength in September, market fears persist. As investors continued to share concerns about the strength and stability of our economic recovery, gold managed to power through and maintain levels above $1,300 per ounce. This strength has aided miners responsible for unearthing the yellow metal.

 

As we head into October, the picture for the gold miners appears promising. If the markets can maintain their September strength, equities will rally, dragging miners along for the ride. On the other side of the coin, in the event that we see more market volatility, gold will remain in favor, aiding these firms as well.

 

Investors that currently have exposure to the gold market should maintain their positions. Newcomers, however, should probably hold off before jumping in. Weakness in the near future may prove to be a better entry point.

 

5. iShares MSCI Chile Investable Market Index Fund (ECH)

The Chilean markets have been on a tear since the start of summer. As we head into the start of the final quarter of 2010, it will be interesting to see if this rally can continue.

 

ECH's impressive strength highlights the broader underlying trend of investors pouring into emerging markets in order to skirt the economic turmoil facing much of the developed world. Latin American nations such as Chile, Brazil and Mexico remain popular regions for investors seeking alternatives to the U.S., Europe and Asia.

 

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