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ETFs: Big Rallies, But Still Far Below All-Time Highs

August 8, 2013 4:16 pm
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ETFs: Big Rallies, But Still Far Below All-Time Highs

The SPDR S&P 500 (NYSE: SPY) and the SPDR Dow Jones Industrial Average (NYSE: DIA) have made a series of new all-time highs this year. So have a plethora of other ETFs.

Funds tracking everything from Internet stocks to the biotechnology sector to spin-offs are not just making new 52-highs this year. They are rising to price points previously not seen. Ever.

Related: These All-Time ETFs Can Keep Going.

Some investors have a tendency to shy away from stocks and ETFs that are making new highs, particularly if the high in question is of the all-time variety. However, evidence exists to support the notion that buying at new highs can be a good idea.

Of course, investors usually prefer to get involved with an ETF before it races to fresh all-time highs. Those folks may want to consider the following ETFs that have enjoyed tremendous rallies this year, but still have ample room to run to their prior all-time highs.

Guggenheim China Technology ETF (NYSE: CQQQ)
In an otherwise glum year for China ETFs, those funds heavy on Internet stocks have thrived. And since the Guggenheim China Technology ETF is entirely devoted to Chinese technology and Internet names, investors have sent the fund soaring by 27.5 percent.

There might still be upside left here. Assuming CQQQ closes around $29.20 Thursday, where it trades at this writing, the ETF would still need to run another 11 percent before reaching its all-time that printed in April 2011.

Financial Select Sector SPDR (NYSE: XLF)
It is a stretch, but the case of the Financial Select Sector SPDR might be one weird example where latecomers thank the financial crisis for something. XLF is up more than 21 percent year-to-date, but in a testament to just how bad things got for this ETF in 2008-2009, XLF's all-time high is around $38 and it printed over six years.

XLF trades around $20.50 today, implying a run of about 85 percent would be necessary to get XLF back to its all-time higher. That is asking a lot, but then again, many of XLF's marquee components are nowhere close to previous highs and not just all-time highs. For example, Bank of America (NYSE: BAC), an XLF top-10 holding, would need to gain two and a half times its Thursday closing price to get close to its September 2008 high.

iShares U.S. Technology ETF (NYSE: IYW)
Large-cap tech ETFs have been laggards this year, though IYW is trading just pennies away from its 52-week high and getting some help from resurgent Apple (NASDAQ: AAPL), among others.

In terms IYW getting back to its all-time, nothing is impossible, but the fund could prove to be a victim of bad timing. As in bad timing of when IYW came to market. That was in May 2000 as the tech bubble was bursting. The ETF touched its all-time around $137 in late August 2000. Although IYW is not a Nasdaq tracking ETF, its return to the August 2000 highs is likely correlated with the Nasdaq Composite's ability to rise another 900 points or so to reclaim its all-time high.

For more on ETFs, click here.

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