5 ETFs to Watch This Week

Cell phone companies and wireless service providers have been some of the most exciting areas of the market to watch recently.
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NEW YORK (TheStreet) -- Here are some of the ways to play the diverse collection of companies stepping up to the earnings plate this week.

iShares Dow Jones U.S. Telecommunications Sector Index Fund (IYZ) - Get Report

Cell phone companies and wireless service providers have been some of the most exciting areas of the market to watch recently as consumers become more reliant on their smartphones to stay connected to the world around them.

This week industry giants,

Verizon

(VZ) - Get Report

and

AT&T

(T) - Get Report

are scheduled to announce their quarterly earnings numbers. Together, these two companies command large percentages of most telecom-focused ETFs. For instance, in IYZ VZ and T account for over 27% of the fund's assets.

While it is possible to get involved in wars raging between industry competitors by investing in companies such as

Google

(GOOG) - Get Report

and

Apple

(AAPL) - Get Report

, a fund like IYZ allows investors to take advantage of our increasing dependence on handheld devices and the need to stay connected.

SPDR S&P Homebuilders ETF

(XHB) - Get Report

Although we are in the midst of earnings season, many investors remain more interested in the macroeconomic data heading through the pipelines. This week, we will be treated to data points including the Fed's Beige Book, and initial claims data. XHB investors, however, will have their sights set on Tuesday when housing starts and building permits data are released.

The housing industry has consistently proven to be a tricky region of the market to tackle. Investors looking for exposure to real estate would be better off using a yield-bearing, REIT-focused ETF such as

iShares Cohen & Steers Realty Majors Index Fund

(ICF) - Get Report

.

SPDR S&P Bank ETF

(KBE) - Get Report

Listed among this earnings heavy week are a slew of companies hailing from the financial industry. The collection of companies scheduled to announce their quarterly performance range from Wall Street titans such as

Citigroup

(C) - Get Report

,

Bank of America

(BAC) - Get Report

and

Wells Fargo

(WFC) - Get Report

to smaller regional institutions such as

Fifth Third Bancorp

(FITB) - Get Report

and

Hudson City

(HCBK)

.

The best way to play the diverse collection of companies stepping up to the earnings plate this week is through KBE. Designed to track the financial sector as a whole, KBE exposes investors to banking institutions of all sizes.

As we look ahead to the near future, investors should use caution when gaining exposure to financials given the recent media and political firestorm surrounding foreclosures. The outcome of this situation remains uncertain and many of these firms could face a rough road ahead.

iShares Barclays 20+ Year Treasury Bond Fund

(TLT) - Get Report

Long term treasuries took a heavy hit last week as investors shunned the protective nature of government issued debt in favor of riskier asset classes. Talk of QEII and a weak U.S. dollar also aided to the weakness.

TLT's downfall last week was steep and sharp, causing the fund to break below its 50-day moving average and return to levels last seen in the middle of September. As we look to this week, it will be interesting to see if the fund is in store for further losses.

I would advise investors to steer clear of TLT for now. In fact, risk tolerant investors may find an inverse long term treasury fund such as

ProShares Short 20+ Year Treasury Fund

(TBF) - Get Report

an attractive short-term play.

iShares Dow Jones U.S. Aerospace & Defense Index Fund

(ITA) - Get Report

Earnings reports from companies including

Boeing

(BA) - Get Report

,

Lockheed Martin

(LMT) - Get Report

will likely direct the performance of the broader aerospace & defense industry this week. Investors looking for a strong play on this section of the market should look to ITA. Within this fund, BA, LMT, account for nearly 15% of the fund's total portfolio.

ITA has seen a good run throughout the fall season. The fund has powering above summer levels appears on its way to revisit 2010 highs last seen in April.

-- Written by Don Dion in Williamstown, Mass.

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At the time of publication, Dion Money Management TBF.

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.