Five ETFs to Watch

NEW YORK ( TheStreet) -- Copenhagen climate talks, movement in the dollar and gold prices and more news from the financial sector will impact ETFs this week. Here are five ETFs to watch in this week.

No. 1 PowerShares WilderHill Clean Energy ( PBW). As the Copenhagen climate talks kick off this week, investor attention will be focused on carbon emissions cuts and clean energy firms. While the Barclays iPath ETN group has a fund specifically targeting carbon emissions plans - the lightly traded and very focused Barclays' iPath Global Carbon ETN ( GRN).

PBW is a large, liquid ETF with an average daily trading volume of more than 400,000 shares, and total assets of $747 million. PBW tracks companies that focus on greener and generally renewable sources of energy and technologies that facilitate cleaner energy.

Top holdings in PBW include American Semiconductor ( AMSC), Fuel Systems Solutions ( FSYS) and Trina Solar ( TSL). As clean energy emissions are hashed out abroad, this fund could benefit stateside from increased awareness of companies making an effort to cut back on harmful emissions.

No. 2. PowerShares DB US Dollar Index Bullish ( UUP). The U.S. dollar hit a one-month high Monday morning as investors eyed jobs data and future fed action. Investors will be tuned to rate-change signals when Fed Chairman Ben Bernanke speaks this afternoon at the Economic Club of Washington,

Thus far, the Federal Reserve has indicated a strong willingness to keep rates low for the foreseeable future to stem job losses and aid economic recovery.

UUP tracks the Deutsche Bank Long US Dollar Index, comprised of futures contracts and designed to replicate the performance of being long the US dollar against the following currencies: euro, yen, British pound, Canadian dollar, Swedish krona and Swiss franc.

Gold's weakness on Friday, coupled with the dollar's strength, could make UUP an interesting fund to track this week. On a longer time horizon, however, the PowerShares DB US Dollar Index Bearish ( UDN) and gold funds like Market Vectors Junior Gold Miners ( GDJX) could continue to benefit from market uncertainty.

iPath Dow Jones-UBS Platinum Trust ETN ( PGM) and the E-TRACS UBS Long Platinum ETN ( PTM) offer exposure to metal. These exchange-traded notes both rely on futures contracts to achieve their objectives as opposed to physically-holding platinum.

No. 3. Market Vector Steel ETF ( SLX). Over the weekend, BHP Billiton ( BHP) and Rio Tinto ( RTP) agreed to combine iron ore operations in Australia. While the proposed deal faced regulatory hurdles, combined savings could help to boost RTP , the second largest holding in SLX.

SLX, which tracks equities involved in a variety of activities that are related to steel production, including the operation of manufacturing mills, fabrication of steel products, or the extraction and reduction of iron ore, is already up over 100% year to date.

A lot of questions surrounding the BHP/RTP deal remain unanswered, and as these points are debated and hashed out this week, stock prices will likely react. Earlier negotiations suggested that a payment of $5.8 billion could be made to RTP from BHP, since RTP has a larger iron-ore production.

Steel is generally a commodity that has an inverse correlation to the dollar, so dollar strength could help to temper SLX' advance.

With varying economic data and component news weighing on this ETF, SLX will be a fund to watch in the upcoming week.

No. 4. iShares Dow Jones U.S. Financial Sector Index Fund ( IYF). As Bank of America's ( BAC) board meets Tuesday and a U.S. court considers CIT Group's plan to exit bankruptcy, financial stocks could be on the move.

IYF tracks financial giants like BA, Goldman Sachs ( GS), Wells Fargo ( WFC) and JP Morgan Chase. Despite public outrage over CEO compensation and oversized profits, large financial firms continue to improve in late 2009 . Year-to-date, IYF is up nearly 17%.

Government intervention has played a large role in the success of major financial firms in 2009, and regulatory action will continue to influence stock prices. As the BA board meets, potentially discussing a new CEO, and more government paybacks continue, the financial sector could flourish in the short term.

No. 5. Market Vectors Junior Gold Miners ( GDXJ). Despite gold's weakness last Friday, GDXJ managed to finish the week marginally higher. This equity-based gold fund, a holding in our ETF Action Portfolio, has managed to attract a remarkable average trading volume of nearly 3 million shares since its November launch.

This ETF exhibits a leveraged-like exposure to gold prices, which have soared in recent weeks. The recent setback in gold prices, combined with continued uncertainty and upcoming economic data, will make GDXJ an interesting fund to watch this week.

Risk-tolerant investors who are bullish on gold should consider adding GDXJ early on this week to take advantage in the pause in gold's advance.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion Management owned PowerShares DB US Dollar Index Bearish and Market Vectors Junior Gold Miners.

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.

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