5 ETFs to Watch This Week

ETFs in the gold, agricultural and networking sectors are poised to make gains this week.
Author:
Publish date:

NEW YORK (TheStreet) -- Look for networking, gold and agriculture ETFs to move higher this week.

iShares S&P GSTI Networking Index Fund (IGN) - Get Report

This fund has nearly 9% of assets in

Cisco

(CSCO) - Get Report

, which reports this week. Analyst expectations are consistent, with high and low estimates at 43 cents and the 40 cents, respectively. Additionally, Cisco beat earnings by at least 2 cents in each of the previous four quarters.

In the past month, IGN has seen strength from the networking holdings such as

Juniper

(JNPR) - Get Report

, as well as companies involved in the smart phone industry.

Qualcomm

(QCOM) - Get Report

has pulled the fund higher, while

Motorola

(MOT)

, maker of one of the most popular Android phones, has seen its shares climb more than 20% in the past month. MOT is now the number one holding in the fund, with nearly 10% of assets.

SPDR Retail

(XRT) - Get Report

Consumer discretionary stocks took a beating after it became clear that business was recovering faster than the consumer. Investors anticipated a consumer rebound earlier this year, but when the numbers didn't match their expectations, shares sold off sharply in May and June.

Still, XRT has had a good year overall, up about 8% compared to less than 2% for the

S&P 500 Index

. Some sectors helping the fund include discount, luxury, specialty and grocers. Two holdings that have underperformed in 2010 report this week

: Kohl

's

(KSS) - Get Report

and

JC Penny

(JCP) - Get Report

. Investors turned very sour on JCP last week, sending shares down about 15%; it appears the market is not optimistic about the firm's prospects. I expect this week will be similarly unkind to retail.

Powershares DB Agriculture Fund

(DBA) - Get Report

Russia halted wheat exports until December, after a heat wave and wildfires damaged the country's agricultural sector. This in turn caused wheat prices to pile more gains on top of the 42% move in July, which was the best monthly performance since 1959. The powerful move lifted other grain prices, with corn seeing a better than 20% move.

Although the move is impressive, it may have yet to peak, as the weather forecast still calls for more hot and dry conditions, which will delay the planting of the next wheat crop and reduce yields at harvest.

SPDR Gold

(GLD) - Get Report

On the back of the weak U.S. dollar, gold climbed back above the $1,200 level last week. The bounce helped lift gold miners and

Market Vectors Gold Miners

(GDX) - Get Report

. August tends to be unfavorable for gold prices, or at the very least it is often a period of consolidation, so I expect prices to move sideways or lower this week.

Claymore/MAC Global Global Energy Index ETF

(TAN) - Get Report

SunPower

(SPWRA)

reports earnings on Tuesday. The company has been a consistent underperformer and dropped to a new all-time low in May.

It has rebounded since then, but continues to underperform the sector as measured by TAN. Analysts are predicting only 10 cents per share in earnings, well below the 25 cents expected three months ago.

Analysts have also cut their earnings estimates for this year and next year. SPWRA could hurt itself with a worse-than-expected result this week, but that probably won't damage the other holdings in TAN because of the low expectations.

The solar sector has enjoyed a rebound of late and was one of the better performing sector ETFs last week. Higher oil prices and a continued rebound in the euro both contributed to the gain.

The ETF held up well during Friday's decline in the market, a good sign for a sector that is associated with bullish and optimistic sentiment. I expect the outperformance will continue ahead of a heavier earnings week next week.

-- Written by Don Dion in Williamstown, Mass.

Readers Also Like:

>>Dow Dividend Stocks For a Rough Patch

At the time of publication, Dion Money Management was long iShares: Comex Gold Trust, Market Vectors Gold Miners and Powershares DB Agriculture Fund.

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.