5 Hardest-Hit, Least-Affected ETFs in Selloff

Permabears will probably point to last week's volatile stock sell-off as proof of a double-dip recession. They'll also suggest that the market's action is indicative of a major decline ahead.

The problem I have with "get-me-noticed" predictions of devastation is the permanency of the position. For instance, when stocks move higher, permabears explain that it is either a "short-seller squeeze" or a meaningless, low-volume event. (Should this imply that a 2% drubbing in mid-August is a "long-call buyer's squeeze" or a "limited-shares-traded" event?)

In truth, we aren't seeing any new info on the state of the U.S. economy. Retail sales are weak and the trade deficit is sucking the life out of GDP.

The economy will find a way to push through at an anemic rate of growth. After all, the Fed and U.S. government have been determined to keep the country from falling off the proverbial cliff with untargeted stimulus packages, unemployment extensions, handouts to the states and Treasury repurchases.

The activity may be saving public-sector jobs and public pensions; it's also saving "Class Warfare Street" at the expense of "Main Street" and "Wall Street."

Indeed, a lack of clarity in energy policy, health care legislation and financial regulation have led corporations to sit on their wallets. There is a pervasive uncertainty in the business world that keeps decision-makers from hiring. For the optimists, profits will continue to surprise on the upside, while the pessimists can continue harping on economic weakness.

Nevertheless, when it comes to terrible economic data, you can count on these ETFs to get whacked. Here are some of the hardest-hit sector ETFs in Thursday's beat-down, and the approximate amount of the slide:
  • iShares Dow Jones U.S. Home Construction (ITB) -3.4%
  • Regional Bank HOLDRs (RKH) -2.8%
  • PowerShares WilderHill Progrsv Energy (PUW) -2.8%
  • SPDR KBW Insurance (KIE) -2.7%
  • iShares Dow Jones U.S. Aerospace & Defense (ITA) -2.4%

And five of the least-affected exchange-traded products in the sell-off, with their approximate results:
  • Internet Infrastructure HOLDRs (IIH) 1.5%
  • JPMorgan Alerian MLP Index (AMJ) -0.3%
  • Market Vectors Gold Miners (GDX) -0.8%
  • iPath DJ-UBS Commodity Index TR (DJP) -0.8%
  • First Trust Dow Jones Internet Index (FDN) -0.8%
ETF Expert, its parent company and clients may hold positions in the ETFs, mutual funds and index funds mentioned. The company receives advertising compensation from Invesco PowerShares Capital Management and Geary Advisors. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities.

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