Market Overview

Eleven For '11: Sector ETFs To Watch In The New Year

Eleven For '11: Sector ETFs To Watch In The New Year

Continuing with the theme of ETFs to watch in 2011, today the Professor is focussing on 11 non-leveraged sector ETFs that very well could be on the minds of traders in the new year.

Some are dividend plays, others are plays on rising commodities prices, but each has a different reason for appearing on the list.

Without further ado, in no particular, here's the list of 11 sector ETFs to watch in 2011.

1) Oil Services HOLDRs (AMEX: OIH):
OIH is the quintessential $100 oil play, or at least one of them, making this ETF one to watch next year. OIH is also worth following to see how one of its top holdings, Transocean (NYSE: RIG), deals with the newly announced government lawsuit against it for its role in the Gulf of Mexico oil spill.

2) Guggenheim Airline ETF (NYSE: FAA):
Another $100 oil play, but in reverse. Assuming oil prices rise, airlines could be in for some pain. Margins for the group are expected to be weaker next year and how well the economy performs will be pivotal for this sector.

3) Market Vectors Coal ETF (NYSE: KOL):
A play on emerging markets demand for coal, KOL is also an M&A play as constituents like Peabody Energy (NYSE: BTU) and Massey Energy (NYSE: MEE) are expected to be involved in further coal consolidation.

4) Financial Select Sector SPDR (NYSE: XLF):
Will financials finally awake from their slumber? Will dividends be restored? Find out the answers to those pressing questions with XLF.

5) Health Care Select Sector SPDR (NYSE: XLV):
XLV should find itself atop many traders' lists, at least for a few weeks, if the Republicans are able to mount a legitimate challenge to over-throwing Obama-care.

6) PowerShares Aerospace & Defense ETF (NYSE: PPA):
The big question here is how vulnerable is defense to possible spending cuts on Capitol Hill? Then again, politicians talk a good game, but rarely deliver on spending cuts.

7) Market Vectors Gold Miners ETF (NYSE: GDX):
If gold's voracious rally finally stalls, or worse yet, the yellow metals falls in bloody fashion, GDX will be in trouble. If the trend doesn't reverse, GDX will continue its ascent.

8) Guggenheim Global Shipping ETF (NYSE: SEA):
Dry bulk shippers were an obvious victim of the global financial crisis, but the group may be starting to show signs of life. SEA is the way to play a rebound in this group.

9) iShares Dow Jones Transportation Average (NYSE: IYT):
The strength (or weakness) in the U.S. economy will be seen in IYT. Plus, Dow theorists love this ETF.

10) Technology Select Sector SPDR (NYSE: XLK):
With tech companies sitting on massive hoards of cash, XLK is another M&A play and perhaps a dividend play. Of course, Apple (Nasdaq: AAPL) makes XLK worth watching.

11) Vanguard REIT Index ETF (NYSE: VNQ):
Another crisis victim, REITs need to make 2011 the year they restore investor confidence. Make VNQ your 2011 REIT play.

Posted-In: Long Ideas M&A News Sector ETFs Short Ideas Dividends Specialty ETFs Global


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