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.
Here are three of his blog posts from the past week:
A Pure Play on Cloud Computing
Published 7/6/2011 03:11 p.m. EDTFirst Trust hit a home run today with the launch of the first ETF that's a pure play on cloud computing, the ISE Cloud Computing Index ETF (SKYY). Even though trading is relatively choppy and weak, and many traders are taking extended vacations this week, more than 260,000 shares of SKYY had crossed the tape before 2:30 p.m. EDT this afternoon. In an industry that some commentators have labeled oversaturated, First Trust has once again proven that you don't have to be the biggest player to succeed -- just nimble. SKYY may not rely on fancy contracts or swaps to deliver its message, but it does manage to capture one of the most under-represented areas of U.S. tech: cloud computing. Consider the power that companies such as Netflix (NFLX) and Google (GOOG) wield with so much "cloud computing space." In today's digital world, it's all about storage and management. > >> Bull or Bear? Vote in Our Poll Pop the hood on SKYY and you'll find the roster of companies that you would probably expect. Top holdings include Netflix, Aruba Networks (ARUN), Teradata (TDC), Amazon (AMZN) and Salesforce (CRM). The best part? Since the fund relies on an equal-weight methodology, industry leaders including Apple (AAPL) and Google (GOOG) don't suck up an outsized amount of space in SKYY's underlying portfolio. If you're starting to think that this fund has a lot in common with First Trust's Internet ETF (FDN), well, it does and it doesn't. Some of the hottest Internet firms -- Netflix, Salesforce, Google -- are also well known for their well-developed cloud computing capabilities. The biggest difference is with firms like Apple - which is included in SKYY but not in FDN -- that do not generate the vast majority of their revenue online. For example, some of SKYY's components provide goods and services in support of the cloud computing space. These similarities and differences considered, I think there is space in the ETF industry for both SKYY and FDN to flourish. SKYY's instant success (as measured by investor interest on its first day of trading) is just one more example of how a fund doesn't have to be laced with derivatives or triple-leveraged to capture the trading public' s attention. At the time of publication, Dion Money Management was long FDN.
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