The Dow Jones Industrial Average on Thursday fell below what was previously the year's nadir, on Oct. 10. Now, 7,197, from Oct. 10, 2002, is squarely in the sights of the bears. If that level is breached, we would be back to prices not seen since 1997.

TheStreet.com Ratings' review of the five most improved and deteriorated exchange-traded fund rating changes for the month shows a few of the defensive ETFs rising faster than their peers. Meanwhile, fear of deflation turned the outlook on five funds from bullish to neutral.

The most improved ETF this month is PowerShares Dynamic Utilities ( PUI), rising five notches to A- from a rating of C. With holdings of Duke Energy ( DUK), Dominion Resources ( D), and American Electric Power ( AEP), the fund has slipped lower recently, but not as much as the overall market sell-off.

The second-most improved fund shies away from stocks completely, instead focusing exclusively on intermediate-term U.S. government bonds. The Vanguard Intermediate-Term Bond ETF ( BIV) rose from a hold rating of C to a buy rating of B+.

Of the remaining ETFs on the list, climbing three notches, the PowerShares Aerospace & Defense Portfolio ( PPA) ranks the highest at C+ on large holdings of United Technologies ( UTX), Boeing ( BA), Lockheed Martin ( LMT), and General Dynamics ( GD)

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