Skip to main content

NEW YORK (ETF Expert) --The fiscal cliff steals the financial headlines on a daily basis. Yet, in spite of increasing volatility and year-end uncertainty, the hot topic hasn't moved the broader market's needle.

Since the presidential election more than six weeks ago, the

S&P 500 SPDR Trust

(SPY) - Get Free Report

has effectively ended in the same place it began. Bears believe this is a sign that upcoming austerity will hamper market progress and that a failed budget negotiation may send stocks plummeting. Bulls believe that stocks are ready to explode to the upside, as long as the White House and Congress cement a deal.

Intriguingly, there are several stock ETFs that are marching to a different drumbeat than the one heard in the District of Columbia. Here's a quick summation:


iShares DJ Transportation

(IYT) - Get Free Report



Dow Jones Transportation Average

has been a thorn in the U.S. stock bull all year long. Unlike the

Dow Jones Industrials Average

that set new bull market highs in May, September and October, the Transports stubbornly drifted lower throughout the summertime and into the fall.

Then something happened in mid-November. Not only did the exchange-traded proxy (IYT) rocket more than 10% in as little as five weeks, but the price hit a new 52-week high on 12/20; on Friday, 12/21, IYT only fell -0.3%.

Granted, a "Dow Theorist" might still be skeptical of the recent turn of events. After all, IYT has not yet revisited its bull market pinnacle set in July 2011. Nevertheless, the demand for the transportation of goods and services should increase markedly with

greater economic stabilization in China.


Guggenheim Global Water

(CGW) - Get Free Report


The idea that one would see handsome profits by investing in companies that provide, purify and conserve the ultimate commodity for homes and businesses is hardly new. In fact, the theme gathered a head of steam in 2006 on the notion that developing countries would require the expertise in enhancing its infrastructure.

More recently, however, some are looking to global water companies as a sustainability play. Whereas one may choose dividend growth models as a solid indication that a company will be providing its product or services for many years to come, one can also look at the end product or service itself. Water is as essential to sustaining life and livelihood as oil; meanwhile, global water corporations rarely have to worry about demand.

On Friday, CGW fell roughly 1/3 as much as broader domestic and global benchmarks. Equally worthy of note, the fund had hit fresh 52-week highs in the week.

Obviously, if the U.S. fails to reach an accord, it's unlikely that stock assets of any stripe would survive the stampede for the exits. That's why it's critical for ETF investors to maintain an unemotional discipline for

reducing downside risk.

That said, the recent rise in transportation stocks and water stocks is telling me that investors are growing increasingly confident in China's economic prospects.

Follow @ETFexpert

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

Gary Gordon reads:

Real Clear Markets

Jeff Miller


Charles Kirk

On Twitter, Gary Gordon follows:

Jonathan Hoenig

Doug Kass

Hard Assets Investor