5 ETFs to Watch This Week

ETF investors will watching to see if a rally in the energy sector materializes this week.
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NEW YORK (TheStreet) -- ETF investors will be closely watching to see if a rally in the energy sector gains strength following the strong earnings of several major companies last week.

iShares Dow Jones U.S. Oil & Gas Production & Exploration Index(IEO) - Get Report

It's the second week of energy earnings and several IEO heavyweight reports, chief among them

Anadarko Petroleum

(APC) - Get Report

and

Chesapeake Energy

(CHK) - Get Report

. APC is 7% of IEO and CHK is 4%.

Both firms are important. Anadarko was a part owner in the Deepwater Horizon and saw its shares were hammered by the disaster. Chesapeake is a major player in the natural gas industry and often serves as a bellwether for investors.

Last week, the oil majors delivered superb earnings, with

ConocoPhillips

(COP) - Get Report

,

Exxon

(XOM) - Get Report

,

Chevron

(CVX) - Get Report

and

Total

(TOT) - Get Report

all coming in above estimates, but a ho-hum market kept shares moving sideways.

As investors digest earnings, I expect the sector to see a nice rally. Good reports from the smaller producers this week would add strength to the move.

Claymore/Alphashares China Small Cap

(HAO) - Get Report

China's economy has passed Japan's to become the second largest in the world, according to the head of China's State Administration of Foreign Exchange.

However, that achievement hasn't led to higher stock prices, which have been moving lower for nearly a year in the case of the Shanghai Composite and six months or more for China ETFs traded in the U.S.

HAO has rallied since the end of May, however, and is less than 10% away from 2010 highs set in April. By comparison,

iShares FTSE/Xinhua China 25

(FXI) - Get Report

has been moving sideways since June and remains about 12% away from its high set last November.

HAO should take out its highs as markets move higher, but watch FXI. HAO can create a large gap with FXI (and vice versa) if they're moving in the same direction, but it's unlikely that these two will diverge for very long. If FXI turns up this week, it's very good news for HAO.

iShares: Dow Transport

(IYT) - Get Report

The transportation index did not fall below its February lows in July, while the

Dow Jones Industrials

did make a new low. The non-confirmation by the transports is a good sign, but both it and the

SPDR DJ Industrial Average

(DIA) - Get Report

have failed to exceed their June highs.

A move higher could come this week, after

FedEx

(FDX) - Get Report

came out with positive guidance for the current quarter. FDX was almost single handedly derailing IYT due to company specific issues that weighed on the stock, including healthcare costs for employees. With that out of the way, IYT will have an easier time advancing.

SPDR Gold Trust

(GLD) - Get Report

Last week saw the largest gold outflows from GLD since July 2009. The outflow comes after a four-week sell off in the yellow metal and appears to be capitulation selling rather than the start of a new wave of selling, but we'll find out whether that's the case this week.

Powershares Dynam Media Portfolio

(PBS) - Get Report

News Corporation

(NWS) - Get Report

,

CBS

(CBS) - Get Report

,

Time Warner

(TWX)

and

Time Warner Cable

(TWC)

are some of the holdings that report earnings this week.

This ETF was one of the best performing sector ETFs until the market correction started in May, when consumer oriented stocks were some of the hardest hit. Advertising is volatile, dependent as it is on consumer spending, and investors have anticipated bad results.

Thus far, earnings reports in the industry have shown a bottoming in ad revenue, but not a pickup.

General Electric

's

(GE) - Get Report

NBC division reported more positive numbers though, and this week there are several television companies reporting. A more positive result could help PBS move higher this week.

-- Written by Don Dion in Williamstown, Mass.

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At the time of publication, Dion Money Management was long iShares Comex Gold Trust.

Don Dion is president and founder of

Dion Money Management

, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.

Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.