This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

ETFs Count on Tech, Financial Rebound

NEW YORK ( TheStreet) -- Financial ETFs took a pounding on Friday in the wake of Bank of America (BAC) and Citigroup (C) earnings, but there's still hope for the sector with Goldman Sachs (GS - Get Report), which reports Tuesday.

Investors may instead want to focus on technology, where IBM (IBM) stands a better chance of sparking a broad sector rally.

Shares of Goldman have been bucking the market's trend over the past few days. After a deal with the SEC ended the civil fraud prosecution against the firm, investors sent up shares nearly 6% since Wednesday's close. Shares even managed a slight gain during the Friday sell-off that sent BAC shares down 9% on the day.

Additionally, the company's positive stock performance dramatically contrasts with the trend of its earnings estimates, which are down more than 50% in the past month and 10% in the past week. That puts Goldman in a decent position to beat its estimates and rally.

Nevertheless, Goldman has only managed one sustained post-earnings rally in the past year. This took place last summer, when the firm beat its earnings and received positive comments from Meredith Whitney, an analyst who had maintained mostly bearish opinions on the financials.

Echoing last July, investors are questioning whether the stock market and the financial sector can move higher. Since April 19, iShares Dow Jones U.S. Broker Dealers (IAI) -- which has 10% of assets in Goldman Sachs, its No. 1 holding -- has lost 18% through this morning. By comparison, Financial Sector Select SPDR (XLF) is down about 16% over the same period. The SPDR S&P 500 (SPY) is down more than 11%.

Last year, IAI, XLF and SPY traded higher in July, but the gains slowed to a crawl after a blistering rally from March into May. Goldman's earnings sparked a financial rally by generating a shift in sentiment.

This time around, investors looking to play another sentiment shift here should consider IAI for a short-term gain, while XLF should perform better over the longer term, as the big banks have further to rebound.

In lieu of financials, the best play going forward may be technology. Investors are growing bullish on the sector thanks to several strong trends, including a technology upgrade cycle.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
IAI $38.10 1.14%
XLF $23.52 0.90%
GS $166.18 1.26%
AAPL $93.64 -0.11%
FB $118.57 0.84%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs