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Navellier's Three Top ETFs
06/22/2009 1:00 pm EST
Louis Navellier, editor of Blue Chip Growth, recommends ETFs for the first time, and he finds three he says will profit from early moves by some hot sectors.
Beginning this month, we're adding sector exchange traded funds (ETFs) to our Blue Chip Growth investing arsenal. Buying specific sector ETFs will allow us to capitalize on [an] Advanced Sector Alert when an industry is just breaking out, helping us profit much earlier in the market cycle.
Three years of back-testing clearly show that our Advanced Sector Alert identifies sectors coming into favor an average of four months in advance of individual stock winners. That means we're likely to be holding these sector ETFs anywhere from three to six months. Our goal is to lock in short-term profits from our sector ETFs first, and then follow up by trading up to the one or two fastest-moving stocks within each sector.
Our Advance Sector Alert is showing the global materials sector is heating up. To capitalize on this sector rotation, I recommend you buy the iShares S&P Global Materials Sector Index (NYSEArca: MXI).
There are two great things about this ETF. First, it covers international investments-a very important area of opportunity as the US continues to grapple with recession. Secondly, this ETF focuses on materials-another word for "commodities."
I've been saying for months that a weak dollar will push up the price of corn, steel, crude oil, and a host of other commodities, since 88% of these goods are denominated in US currency. This ETF has a finger in every one of those commodity pies!
This ETF is up a whopping 63% since the March 9th lows, significantly outpacing the broader market, and I expect that these gains are only the beginning as the dollar continues to decay in the months ahead.
Another sector causing our Advance Sector Alert to flash and flutter is the oil equipment and services area. You can buy iShares DJ US Oil Equipment & Services Index (NYSEArca: IEZ) to ride the up swing in this sector. As the name implies, this fund specifically tracks stocks that are in the oil service industry. As crude oil has cruised about $70 a barrel to set a new high for the year, many energy stocks on our Buy list have been booming. The IEZ fund will help us cash in while we're monitoring this sector in search of our next [stock] buys.
Finally, our Advance Sector Alert is signaling the technology sector is heating up, so I'm recommending the iShares DJ US Technology Sector Index (NYSEArca: IYW).
This ETF currently tracks a group of stocks that include Apple (Nasdaq: AAPL), Microsoft (Nasdaq: MSFT), Intel (Nasdaq: INTC), and others. I still think it's too soon to tell which one of these stocks will lead the tech sector, but this sector is heating up, and this ETF will allow you to share in the profits and shoulder much less risk. When the few leaders of the pack emerge, look for them to be added to our Buy list-but for now, this ETF is your way to play the tech boom.
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