Market Overview

ETFs For The Golden Cross


Heading into the start of trading today, there was plenty of chatter about one of the most important technical conditions a trader can encounter: The golden cross. In this case we're referring to a move of S&P 500's 50-day moving average above its 200-day line.

From Reuters: "In the last 50 years, according to data compiled by Birinyi Associates, a golden cross on the S&P 500 has augured further gains six months ahead in eight out of 10 times. The average gain has been 6.6%."

That's good stuff, but it doesn't look like the golden cross is going to happen today. At least not for the S&P 500. Don't worry because there are plenty of ETFs that have experienced golden crosses recently and that could mean more upside is on the way for these funds in the weeks ahead. (Note: Only non-leveraged ETFs were considered).

First Trust S&P REIT Index Fund (NYSE: FRI) In the world of REIT ETFs, there are funds that get a lot more attention than the First Trust S&P REIT Index Fund, but this is still a decent fund. It's also larger than a lot of folks probably realize with over $390 million in assets under management. Home to 120 stocks, FRI's 50-day line just crossed above the 200-day mark a few days ago. As a result the difference between the two is slight, but the ETF has enjoyed a nice start to 2012 and it has a 30-day SEC yield of almost 3.4%.

iShares Dow Jones Transportation Average (NYSE: IYT) The iShares Dow Jones Transportation Average has been another solid performer in 2012 and the fact that this economically sensitive ETF has experienced a golden cross could prove to be a bullish sign for the broader market. FedEx (NYSE: FDX) has only recently made a golden cross of its own, so further momentum in that stock along with the major railroad operators could propel IYT in the near-term.

Vanguard Mega Cap 300 Index ETF (NYSE: MGC) For those longing for a golden cross with the comfort of mega-cap stocks, we present the Vanguard Mega Cap 300 Index ETF. Actually, MGC is home to 304 stocks and nine out of its top-10 holdings are Dow stocks with Apple (Nasdaq: AAPL) being the exception. MGC has nearly $504 million in assets under management and with an expense ratio of 0.12% is cheaper than 89% of comparable funds, according to the Vanguard Web site.

MGC's near-term issue is finding support at its 20-day moving average or breaking resistance at $46. This ETF is more defensive than "risk on" so be aware of that if high beta fare leads a 2012 rally.

Vanguard Growth ETF (NYSE: VUG) The Vanguard Growth ETF is one we've been bullish on for a while and the ETF has rewarded that view with a year-to-date gain of about 6%. As we always say about VUG, this is the type of growth ETF conservative investors can embrace as a fair amount of VUG's holdings are value, not growth stocks. An expense ratio of 0.12% means the ETF is cheaper than 91% of comparable funds. A golden cross means VUG could find its way to $70.

PowerShares KBW High Dividend Yield Financial Portfolio (NYSE: KBWD) While big bank stocks are still offering piddly dividends and yields, the PowerShares KBW High Dividend Yield Financial Portfolio, about two-thirds of which is devoted to small-cap value stocks, features a distribution yield of almost 10%. KBWD tracks small region banks, insurance providers and mortgage REITs among other financial services firms. The ETF currently resides about 40 cents off its 52-week high.

Posted-In: Long Ideas News Sector ETFs Broad U.S. Equity ETFs Short Ideas Dividends Specialty ETFs Intraday Update Best of Benzinga


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