Five ETFs to Watch This Week

NEW YORK ( TheStreet) -- Exchange-traded fund investors should keep an eye on earnings this week as Alcoa ( AA), Intel ( INTC) and JPMorgan Chase ( JPM) report on Monday, Thursday and Friday, respectively. New funds and a strengthening dollar also will be trends to watch for ETF traders.

iShares Dow Jones U.S. Materials ( IYM)

The demand for industrial materials is increasing as global manufacturing recovers. Investors will be watching Alcoa's earnings Monday to gauge this demand and assess the economy at large.

Alcoa makes up nearly 4% of IYM, so news about the company and the sector could move this ETF Monday. Analysts currently expect earnings of 6 cents a share for Alcoa.

While Monday's data may move IYM in the short term, ETF investors also could use this fund to bet on longer-term sector recovery.

ETFS Physical Palladium Shares ( PALL)

Launched along with the ETFS Physical Platinum Shares ETF ( PPLT) last Friday, PALL is a groundbreaking new product that will likely draw investor attention in its first full trading week.

While U.S. investors have had access to physically-backed gold and silver funds for some time now, PPLT and PALL are the first physically-backed U.S. traded platinum and palladium funds.

According to year-end data from the National Stock Exchange, the physically-backed SPDR Gold Shares ETF ( GLD) is the second largest U.S. ETF when measured by net assets. During 2009, GLD attracted nearly $14 billion in net assets.

Platinum and palladium, which are used in the creation of catalytic converters, are an appealing holding for investors betting on higher emissions standards in the U.S. and abroad. Both intrinsic value and industrial application should help to boost the appeal of these funds.

iShares Dow Jones U.S. Financial Services Index Fund ( IYG)

JPMorgan makes up a whopping 13.59% of IYG, so investors should expect this ETF to move with Friday's earnings announcement. Improved market conditions and reduced competition should continue to help this financial firm and IYG as a whole.

IYG offers focused exposure to U.S. banks and excludes riskier assets like real estate investment trusts. During the one-year period ended Jan. 7, IYG recovered nearly 30%. As investors look forward and balance sheets stabilize, this top-heavy ETF may still have a way to run in 2010.

In the short term, investors should keep an eye on IYG this week as bank CEOs testify at the Financial Crisis Commission meeting on Wednesday. Public reaction to the words of JPMorgan, Goldman Sachs ( GS) and Morgan Stanley ( MS) executives could move these firms, and IYG, early in the week.

Market Vectors Agribusiness ETF ( MOO)

Two events this week could impact the major agriculture producers that comprise MOO: On Tuesday, the Department of Agriculture issues updated crop-production estimates; on Wednesday, Monsanto ( MON) reviews its research-and-development pipeline in Boston.

Monsanto is the third-largest holding in MOO, making up nearly 8% of the fund. Both crop estimates, as well as pipeline analysis, will be important to the success of this ETF over the course of the week.

Nearly every component in this ETF counts grain farmers as important customers, so crop-production estimates could sway this fund in the short term.

ProShares UltraShort 20+ Year Treasury ( TBT)

Bond auctions this week will test the recent tranquility in the market for Treasuries. After a marked decline in the last few weeks, Treasuries seem to have steadied. This week, however, auctions of Treasury Inflation-Protected Securities, three-year bonds, 10-year bonds and 30-years could result in volatility.

TBT has been a popular vehicle for investors bearish on Treasury prospects. Investors should keep an eye to this ETF as supply tests investor demand.

-- Written by Don Dion in Williamstown, Mass.
At the time of publication, Dion was long Market Vectors Agribusiness ETF.

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.