Don Dion's Weekly ETF Blog Wrap

NEW YORK (TheStreet) -- Don Dion posts his current insights on the stock, bond, commodity and currency markets in his RealMoney blog, anticipating which ETFs will be in play next.

In the following three blogs from the past week Don commented on the trends that are working so far this year, the balanced approach of the SPDR S&P Retail ETF and his ETF Oscar winner.

Three Trends That Are Working for ETFs

Posted 03/10/2010 1:15 p.m. EST

A helpful approach is to look at what's been working in 2010, and fundamentally assess whether these trends will continue. Here are three themes that stand out.

Biotech Bullishness

Bidding has helped to buoy biotech as companies with cash look to buy earnings. OSI Pharmaceuticals(OSIP) and Millipore(MIL) have been sector standouts, helping to push biotech ETFs higher.

In a sector characterized by homeruns and strikeouts, ETFs offer a way to gain exposure while mitigating single-security risk. While Human Genome Sciences(HGSI) now trades over $30, a more than 5,000% increase from the same time last year, a late-stage failure for Medivation's (MDVN) Alzheimer's drug set that stock back 65% in a single session last week.

How to play: First Trust NYSE Arca Biotech Index(FBT) uses an equal-weight methodology to give investors exposure to 20 firms that represent a cross section of the sector. Unlike iShares Nasdaq Biotechnology(IBB), which concentrates assets in industry giants and top holdings, FBT offers a more balanced viewpoint.

It also doesn't hurt that FBT's portfolio contains both OSI Pharmaceuticals and Millipore.

Regional Banks Roar

As the Volcker rule proposal signals a change of tone in Washington, ETFs focused on regional banks, such as iShares Dow Jones U.S. Regional Banks(IAT) and the regional-bank-heavy SPDR KBW Bank(KBE), have outperformed big-bank funds.

While the Volcker proposal will likely continue to meet resistance, its introduction marks a shift from the big-bank bailouts that put giants such as Goldman Sachs(GS) and JPMorgan Chase(JPM) in the spotlight.

How to play: As the government sets it sights on financial reform, KBE and IAT could continue to outperform. Both ETFs are strong, liquid picks for regional banking exposure.

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