No DNA Found In IBB!

Over the past 6 weeks the most explosive company in the Biotech industry has been Genentech (DNA). I assumed when I was hearing the good news that I was participating in the gains through my investments in Biotech iShares (IBB)in my retirement account. But recently I pulled up a chart and saw that while DNA and the BBH (Holdr) had both skyrocketed to new yearly highs, IBB was still skidding along the lows for the year. I was in shock!

It turns out that ALL ETF's ARE NOT CREATED EQUAL!

In fact, the differences between BBH and IBB are absolutely striking! The reason I purchase IBB shares is because they accept fractional share purchases from accounts like FolioFN and Sharebuilder. But with such sharp differences in investment styles these two ETF's show absolutely no correlation to each other!

In BBH their position in DNA makes up just over 40% of their portfolio today and Amgen is the second biggest holding making up over 24%. When I searched through the daily holdings report for IBB I couldn't find any position in DNA! Could this be possible? The only large position in IBB is in Amgen and that is only 16%, the next largest position is 4.19% position in Gidead (GILD). A biotech ETF having no position whatsoever in the company that has pulled ahead of Amgen to the #1 Biotech Company in the world? It seems impossible but you can check for yourself and you can look at the charts below and see that it appears to be true! How disappointing...... From now on I will examine the fund holdings much more closely before investing.



Here is the chart for Genentech ( DNA )



Here is the Chart For the BBH Holdr over the same period



Sadly, here is the Chart for the IBB iShare ETF over the same period

SMH Held Bottom End Of Trading Range

The Semiconductor ETF (SMH) appears to have held support at the bottom of it's trading range which is $30. After a steep decline in 2004 SMH has been range bound between $30 and $35 for the past several months.

Oil Sector Appears To Be Topping

Oil prices plunged today as the weekly inventory report once again showed a higher than expected build in crude oil inventories. Supplies of crude oil are actually well above the 5 year average, but traders have kept the market near all time highs based on a shortage of refinery capacity. It appears that the spectulators headed for the exits after todays numbers.

"Oil plummeted $2.59 to $51.61 on the New York Mercantile Exchange following the government's weekly inventory report, which showed a 5.5 million barrel increase in crude supplies, but a 300,000 barrel draw on gasoline; analysts had been hoping for a build. The energy stocks in the S&P 500 collectively shed 2.58 percent on the news, according to the ETF that tracks the sector; Exxon Mobil Corp. dropped 1.5 percent, or 89 cents, to $58.38, making it Dow's worst performing stock for the day."

The XLE ( Energy Services ETF ) has been one of the best performing of the year, but closed down over $1 today on heavy volume.

ETF Short Interest Rises In February

According to the monthly report from Morgan Stanley, the percentage of the outstanding ETF shares sold short rose to 17.3% in February from an 18 month low of 16.8% in January. This indicates that a few market participants have turned bearish, but overall the level of optimism remains at lofty levels.

In other news, the growth of ETF's and ETF assets remained strong. 12 new ETF funds have been launched this year and Global Daily Trading volume has increased 19.4% year to date. Additionally, total ETF assets rose to $313.6 Billion which represents an increase of 1.7% over the previous month.

ETF's continue to be the fastest growing sector of the Investment MarketPlace as more and more people choose them for the flexibility and low fee structure. As more and more funds come to market, investors are able to customize their portfolios to fit their individual investment styles and objectives. As long as innovation continues the growth in assets should also.

Stock ETF inflows jump as fund sales sluggish

"Meanwhile, cash flooded into exchange-traded funds that invest in domestic equities, as ETFs took in $4.8 billion last week after gathering $740 million the prior week. ETFs are baskets of securities that trade on exchanges like stocks.

ETFs and mutual funds are both seeing solid demand for international stocks, taking in $1 billion and $1.5 billion last week, respectively.

Two large and established ETFs investing in U.S. stocks, the S&P 500-tracking SPDR Trust ( SPY ) and the Nasdaq-100 Trust ( QQQQ ) , were hot sellers last week, gathering $2.3 billion and $1.2 billion."

Stock ETF inflows jump as fund sales sluggish

SMH Showing Strength & BBH Showing Weakness

In the decline these past couple days one of the weakest sectors of the market remains the Biotechs. BBH (Biotech Holdr) at 134.28 are pushing four month lows and are in striking distance of 52 week lows which stand at 127.79. The biotechs were already under pressure at the time Biogen dropped their bombshell last week.

Semiconductors on the other hand as represented by the SMH (Semiconductor Holdr)has rallied back to multi-month highs and signigicant resistance in the $35 area. It's been a nice bounce off the sub $30 January lows, but to create a major breakout it will have to close above $35.

Is Inflation Back?

"As recently as 2003, many U.S investors were worried about deflation. Investors feared that the US economy, characterized by falling prices for technology products, sky-high productivity growth and spare capacity would beging to resemble the moribund economy of the Japanese. In Japan, it was thought, interest rates already at .025% meant that economic stimulus had failed. A deflationary climate meant that businesses lacked pricing incentives and an already sluggish consumer was further encouraged to postpone. But hardly two years later, with US productivity growth slowing, oil hitting all-time highs, and the dollar collapsing, worries about deflation in the US economy seem a far-away dream. Investors are just starting to awaken to another possibility, the so-called I-word: inflation. While it is not clear that it is here yet, an attentive ETF investor will be aware of, and possibly prepared for, an inflationary economy."

Is Inflation Back?:

January's ETF short interest lowest since April 2003

ETF Short Interest has once again fallen to levels not seen since April 2003. This means that investors are confident that the market is not going to decline significantly. This coincides with multi-year lows in volatility and a general complacency among traders. It will be interesting to see if the market can breakout above it's recent trading range without first experiencing a decline in order to rattle investor confidence.

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"January's level of short interest for U.S. exchange-traded funds as a percentage of shares outstanding was the lowest in nearly two years, according to a Monday report from Morgan Stanley.

The last time that ETF short interest dipped below January's level was in April 2003, when it was 500.5 million shares or 16.7 percent of shares outstanding, Morgan Stanley said.

ETF short interest peaked in March 2004 at 1.2 billion shares, or 34.3 percent of shares outstanding. Since then, it has steadily declined each month.

Short interest in publicly traded companies is normally much lower than ETFs, averaging 1 percent to 2 percent of market capitalization."

"The higher the short interest, the more investors are expecting a downturn," said Morgan Stanley analyst Deborah Fuhr. "Short positions tend to fall in value as stocks rise, and vice versa."

Read The Full Article:

January's ETF short interest lowest since April 2003 - Financial - Specialty Finance - Financial Services - Markets/Exchanges - Mutual Funds - Market News:

Jan. ETF assets fall to $222.9B

"The combined assets under management of U.S. exchange-traded funds were down $3.3 billion to $222.9 billion in January, the Investment Company Institute, the fund industry's main trade group, reported Friday."

Jan. ETF assets fall to $222.9B

Green Energy ETF To Spring Soon

A new energy ETF should benefit from rising oil prices, but it wonÂ't contain the typical oil refiners. ThatÂ's because it will follow an index of renewable or "greener" energy companies.

PowerShares WilderHill Clean Energy Portfolio (AMEX:PBW - News) is a bet on the emergence of green energy as a major economic force beyond its current niche markets. Component firms have gathered much of the knowledge of how to produce, sell and maintain state-of-the-art alternative energy systems including solar, wind and fuel cells. The fund is expected to trade in February or March 2005.



Green Energy ETF To Spring Soon