New ETF Targets High Dividend Stocks

The SPDR Dividend ETF (SDY.A: Quote, Profile, Research) tracks the Standard & Poor's High Yield Dividend Aristocrats Index, which includes 50 high- yielding companies in the S&P Composite of 1,500 stocks that meet certain criteria and have increased their dividends every year for at least 25 years.

Howard Silverblatt, market equity analyst for S&P, said at a briefing at the Amex that dividends have been regaining favor with investors since late in 2002, after a long period in which they were out of fashion.

"Basically, companies were penalized for returning cash to their owners," he said. But the bear market of 2000-2002 brought a change in the way companies and investors viewed dividends, he said.

The components must have a minimum market capitalization of $500 million and must trade an average of 1.5 million shares or more per year.

Concentration limits prevent any stock from being more than 4 percent of the index weight at the time of a quarterly re-balancing. Those issues with the highest yield get the biggest weight in the index.

Most recently, the yield on the portfolio was about 3.4 percent.

"There are other dividend products out there that are very heavily weighted toward utilities and financial," said Jim Ross, co-head of the SSgA Advisor Strategies Group.

The SPDR Dividend ETF is currently about 26 percent in financial stocks, and utilities and financials together make up less than 50 percent.




Stock Market News and Investment Information | Reuters.com

Beware The Faults in Homebuilding ETF

PowerShares recently came out with an ETF aimed at the red hot housing sector. It's the Building and Construction Portfolio trading under the symbol PKB. At first it seemed like a great way to trade a basket of homebuilders, but as you will see upon examination, it's much broader than homebuilding stocks.

Here is a good indepth article that talks about the broad makeup of the portfolio.


Beware Faults in Homebuilding ETF

SMH Rallied & So Did The Nasdaq

After getting to the middle of the range at 32.50 the Semiconductors staged a sharp rally that brought the SMH back over $35. The semiconductors haven't been leading the nasdaq's moves higher this year, but have been providing downward pressure. The fact that they had a sharp snap back rally, allowed the nasdaq to rally back toward it's highs.

Notice, the QQQQ (Nasdaq 100) has actually rallied to new highs for the year which means Large Cap Tech is leading the market. Another area of leadership has been the Dow Jones Transportation Index, which is surprising considering the high energy prices. If you are a believer in Dow Theory, a break out in the Dow Jones Industrials this fall would be very bullish!

The Dow Jones Utilities just completed the most incredible 3 year rally that looked more like a tech or biotech rally. But they have cooled off in recent weeks as the bond market moved lower.

SMH Has Been Pressuring The Nasdaq

If you are looking for the source of weakness in the nasdaq, you need to look no further than the Semiconductors ( SMH ). After breaking out of it range (above $35) the SMH recently failed and broke back down through that level. It appears to want to test the bottom end of that range around $30. If that takes place it will continue to weigh on the nasdaq for the time being. A move back above $35 would allow the nasdaq to regain it's footing.

Here is the chart, for now it's rather ugly:

Semiconductor ETF ( SMH ) Testing Top Of Range

After holding the bottom end of it's range near $30 the SMH ( Semiconductor Holdr ETF ) has rallied to the upper end of this year's trading range at $35. A convincing breakout above $35 would open the door to an extended rally in both the semiconductor index and the Nasdaq in general. As you can see however, the rsi is approaching 80 so some consolidation would be likely before a major breakout.

Here is a chart of the SMH over the past 6 months:

Nasdaq & qqqq breakout!

The Nasdaq 100 index has broken and retested the downtrend line that has been in place all year. Today it also cleared the 200 day moving average. The Nasdaq 100 is represented by the qqqq etf. Each share of qqqq represents 1/40th of the index, in other words it would take 40 shares to equal 1 share of each stock in the Nasdaq 100 index.




The Semiconductors have been leading the way since holding support at the bottom end of their trading range. You can see that SMH ( The semiconductor holdr) broke out prior to the Nasdaq 100.



Breakouts like this can often be "fake outs" but in this case nearly every index is breaking out at the same time so that adds validity to the situation.

Rydex Investments Launches Mega-Cap Exchange Traded Fund (ETF) Benchmarked to Russell Top 50(TM) Index

Press Release Source: Rydex Investments

Rydex Investments Launches Mega-Cap Exchange Traded Fund (ETF) Benchmarked to Russell Top 50(TM) Index

Tuesday May 10, 8:24 am ET

New ETF to Track the 50 Largest Companies in the U.S.

ROCKVILLE, Md., May 10 /PRNewswire/ -- Rydex Investments today announced the addition of a second ETF to its fund line up: Rydex Russell Top 50 ETF (Ticker: XLG). The fund, listed on the American Stock Exchange, tracks the newly created Russell Top 50(TM) Index and is designed to give investors exposure to the 50 largest companies in the U.S. These 50 mega-cap companies represent approximately 40% of the total U.S. market capitalization. The smallest security in the index has an approximate market cap of $46 billion.

"Russell's outstanding reputation in the industry, coupled with the experience of the American Stock Exchange and the innovation that Rydex has brought to the industry make this a particularly attractive product for certain investors (although no investment strategy can eliminate risk or guarantee investment returns)," commented Steve Sachs, director of trading, Rydex Investments. "There is certainly some belief in the market that large- caps have the potential to outperform given current market and economic conditions. A mega-cap fund has the potential to provide enhanced returns relative to other major market indices."

Rydex Russell Top 50 ETF is the only ETF of its kind focusing on the top 50 mega caps. This new ETF provides exposure to America's largest companies through one fund and has the potential to outperform in periods of mega-cap rallies, a common occurrence during a time of economic expansion. The Russell Top 50(TM) Index is reviewed annually and reconstituted in an effort to ensure the appropriate mega-cap exposure. In addition, companies are selected solely on their market cap, regardless of their sector or industry representation.

"At Rydex, we listen to our advisors and strive to respond to their investment needs -- and to those of their clients -- by providing innovative and timely solutions. This product is in direct response to those needs," said Carl Verboncoeur, chief executive officer, Rydex Investments. "Until now, there has been a gap in the ETF marketplace for a mega-cap investment option. We feel that this product fills that gap nicely."

XLG comes less than two years after the successful launch of Rydex's first ETF, Rydex S&P Equal Weight ETF (Ticker: RSP), which has garnered over $740 million in assets. While each fund has its own, unique investment strategy, both provide investors with the same benefits that are obtained by investing in an ETF. ETFs can be a relatively low cost investment vehicle and trade throughout the day on an exchange, much like a stock. However, like a stock, ETFs are subject to market risk and price fluctuation. In addition, the ETF structure can be an extremely tax-efficient investment and may reduce the risk, volatility, time and attention that could be involved in owning stock in individual companies.

About Rydex

Rydex Investments, the investment advisor to Rydex Funds, is a leader in developing specialized investments that are essential components of a modern portfolio. Through continuous innovation, Rydex attempts to anticipate the evolving needs of investors. Rydex is committed to helping investors and investment advisors maximize the value of our investing tools and strategies and to providing an outstanding level of customer service. Rydex manages $14 billion in assets via 45 mutual funds, two ETFs -- Rydex S&P Equal Weight ETF and Rydex Russell Top 50 ETF -- as well as Rydex SPhinX Fund, which is a registered fund of hedge funds.

For more complete information regarding Rydex funds call 800.820.0888 or visit http://www.rydexinvestments.com for a prospectus. Investors should consider the investment objectives, risks, charges and expenses of a fund carefully before investing. The fund's prospectus contains this and other information about the fund. Please read the prospectus carefully before you invest or send money.

Rydex Russell Top 50 ETF and Rydex S&P Equal Weight ETF are subject to risks similar to those of stocks and may not be suitable for all investors. Shares can be bought and sold through a broker and the selling shareholder may have to pay brokerage commissions in connection with the sale. Investment returns and principal value will fluctuate so that when shares are redeemed, they may be worth more or less than original cost. Shares may only be redeemed directly from the fund by Authorized Participants via Creation Units. The elimination of the bias toward large-cap companies in the fund also lessens the impact of large-cap gains as compared to those reflected in funds benchmarked to the S&P 500 Index. Additionally, Rydex Russell Top 50 ETF is subject to the risk that large-capitalization stocks may underperform other segments of the equity market or the equity markets as a whole. Please see the prospectus for more details.

The fund is not sponsored, endorsed, sold or promoted by the Russell Investment Group, the creator of the Russell Top 50(TM) Index. Russell makes no representation regarding the advisability of investing in the fund.

"S&P®" and "S&P 500®" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by Rydex Investments and its affiliates. Rydex S&P Equal Weight ETF is not sponsored, endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in the fund.

Rydex SPhinX Fund may not be suitable for all investors. Rydex SPhinX Fund invests primarily in unregistered hedge funds that are not subject to the regulations and standards afforded registered securities. These underlying hedge funds may use speculative investment strategies, such as leverage, derivatives and short sales of securities that involve significant risk. Shares of the fund are available only to eligible investors, are subject to restrictions on transferability and re-sale and have limited liquidity. Share repurchase offers are made at the sole discretion of the board. Shares repurchased within one year of the investor purchase date may be subject to a fee of 1%. Please see the prospectus for additional information.

Any overviews herein are intended to be general in nature and for current interest. While helpful, these overviews are no substitute for professional tax, financial or legal advice. Investors should seek such professional advice for their particular situation. Neither Rydex Distributors, Inc. nor any of its affiliates or representatives is providing tax, financial or legal advice.

Rydex Distributors, Inc., an affiliate of Rydex Investments, is the distributor of the Rydex funds.




--------------------------------------------------------------------------------
Source: Rydex Investments

SPY Breaking Downtrend Line

The S&P 500 ETF (SPY) looks like it will close above the downtrend line that has been in place since the beginning of the year. With a strong close today the RSI will close above 50% and at it's highest level since March.

Double Bottom Formed In IBB

As we discussed last week, the iShares Biotechnology ETF (IBB) contains a very diverse group of smaller biotech companies with the only large position being 16% in Amgen. It has been a tough year for biotech outside of Genentech (DNA) which has scored two product approvals in the past 60 days.

But now IBB has made a double bottom on the charts at $62 and change, which is just above the 52 week low of $61.22. This could be a sign that the downward pressure on the sector is subsiding.



In Semiconductor land, the iShares ETF (IGW) also held the bottom end of it's recent trading range at $47. Additionally, SMH (the semiconductor holdr) held the bottom of it's range near $30. These two sectors have significant corelation with the Nasdaq index, so if these sectors have found support it should help out the broader indices as well.

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