Five ETFs to Watch This Week

NEW YORK (TheStreet) -- Earnings and politics will be two factors driving ETFs this week. Earnings news will impact solar and water ETFs, while a Thailand fund will digest an important court decision. Meanwhile the movements of a euro ETF will heavily influenced by Europe's efforts to grapple with a deepening sovereign debt crisis.

Claymore/MAC Global Solar (TAN)

This fund declined again last week and this sector has failed to stabilize along with the broader market. It made a death cross on Friday, with the 50-day moving average falling below the 200-day moving average. Exposure to government-supported demand in Europe faces a double whammy of a weaker euro and weak government finances.

Solar earnings continue to come in this week with Suntech Power ( STP), which accounts for 4.7% of TAN, reporting on Thursday. Analysts forecast the company earned 11 cents per share on $467 million in revenue. Canadian Solar ( CSIQ) also reports, with analysts looking for 48 cents per share on roughly $267 million in revenue. CSIQ accounts for 3.6% of TAN's portfolio.

iShares MSCI Thailand Investable Market Index Fund ( THD)

Last Friday the Thai supreme court ruled that former Prime Minister Thaksin Shinawatra had used his office to benefit his own business and seized two-thirds of his $2.2 billion fortune. The amount he was able to keep was what he had previously declared as personal assets, while the rest had been hidden from government oversight.

The ruling itself is part of a more complex political dispute between his "red shirt" supporters and their "yellow shirt" opponents, and many analysts were expecting violence in the streets.

Instead, the reaction was muted and the stock market gained on the day. Still, there's reason to be concerned about political instability. THD has been a relative outperformer in the region year to date, and if this matter is truly in the past, performance this week should reflect that.

PowerShares Water Resources ( PHO)

Veolia ( VE) accounts for 5% of PHO and will report its annual results on Friday. Its water and environmental services divisions provide the bulk of earnings, but the firm was recently awarded a license to operate passenger trains in France.

VE accounts for nearly 10% of the Market Vectors Environmental Services ETF ( EVX) and will have a larger impact there, but the fund has a low trading volume at less than 4,000 shares per day.

iShares Dow Jones U.S. Home Construction ( ITB)

This ETF has been outperforming as of late. Over the past three months, the fund has outperformed the S&P 500 Index by about 10%, and year to date, it is up more than 7% versus a 1% decline for the S&P 500 Index.

With housing data negative last week as new and existing home sales fell in January, ITB underperformed for the week. The broader market has gone nowhere since early November, but housing was one area that outperformed. A decline here would be a negative portent.

CurrencyShares Euro ( FXE)

This fund will remain one to watch as long as debt problems are an issue in Europe. Euro weakness helps the U.S. dollar index, and this has negative implications for commodity prices in the short-run, in addition to helping the U.S. markets outperform Europe.

On Friday, Standard & Poor's warned the Spanish government that it could downgrade its credit rating due to the weak economy.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion does not have any positions in the funds mentioned.

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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