ETF Outlook for Wednesday, November 27, 2013

ETF Outlook for Wednesday, November 27, 2013

PowerShares Dynamic Media Portfolio ETF PBS

The media stocks remain hot as they closed yesterday at a new all-time high and stretched their 2013 gain to 50 percent. The chatter involving consolidation in the cable sector has the stocks adding big gains in the last week. The number three holding, Time Warner Cable TWC, is up 14 percent in the last week and is trading at a new all-time high.

Several stocks in the cable sector have been mentioned as take over targets or acquirers with consolidation needed in the struggling business model. Other top holdings include Yahoo YHOO and Google GOOG.

SPDR Homebuilders ETF XHB

Better than expected housing starts for last month sent investors rushing back into the housing sector. XHB gained 2.2 percent and closed at its best level since May. The name of the ETF is deceiving because only 29 percent of the ETF is invested in homebuilding stocks.

See also: ETFs for Turkey Day (PBJ, IYT, XRT, TUR)

The remainder is invested in building products, home furnishings, appliances, and retail. There are only two homebuilders in the top ten holdings. That being said, the chart on XHB is much better than the iShares Dow Jones U.S. Home Construction ETF ITB, which focuses heavily on the homebuilders.

Guggenheim Wilshire Micro-Cap ETF WMCR

A total of over 950 micro-cap stocks make up this ETF that was up 1.8 percent yesterday to a new all-time high. For the year WMCR is up 41 percent. The smallest asset class has historically been an outperformer during bull market and the current bull market has not been any different.

The micro-caps are often overlooked as they are considered too risky for the average investor when in reality it has a beta of 1.02 versus the S&P 500. The diversity within the ETF is a big bonus; the top holding makes up 0.63 percent and the top ten holdings only account for 4.8 percent of the allocation.

SPDR Morgan Stanley Technology ETF MTK

Last night after the closing bell Hewlett-Packard HPQ reported earnings that were a penny above estimates and revenue that came in $1.19 billion above expectations. The stock was up over 3.5 percent after the earnings release.

The stock is the number three holding in MTK, accounting for 4.1 percent of the portfolio. A continued move today could push MTK into the top sector performers list on a day that should see light volume.