Are Defense Sector ETFs A Post-Sequester Bargain?
However, in 2013, the PPA:SPY price ratio demonstrates that the relative strength of the defense sector is weakening. This may largely be attributed to apprehension about imminent cuts to defense spending.
By the same token, the investment community has been chomping at the bit to buy the proverbial dips. Corrections may be short-lived, if for no other reason that inaction on the part of congressional leaders may translate into continued stimulus from the Federal Reserve.
The selloff in PPA and ITA may be harsher and more severe than the market at large, but it may also provide trend-followers with an opportunistic purchase. If you see an opportunity to get PPA at a price that is 10% lower than it is today, you might benefit by seizing the day.
As always, use a stop-limit loss order to minimize the risk of continued selling pressure.Follow @ETFexpert This article was written by an independent contributor, separate from TheStreet's regular news coverage.
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