The Most Promising ETF’s? Russia and Coal

Market Vectors Russia (RSX) and Coal (KOL) remain 1-2 in this week's sector ratings, although the order has switched.  Both sectors have strength ratings over 100, indicating that they are expected to perform in the top 2% of historical ETF returns over the next month.  (We have been showing the results of our sector model each week with a one-day delay.  Investors interested in more details can request a free report via email — found at the top left of the page).

A Look at the Fundamentals

The Market Vectors Russia ETF is a closet energy play, with nearly 40% exposure.  Tom Lydon at ETFtrends has a nice article on the relationship between Germany and Russia, leading to more modernization.  This has helped the RSX ETF.

When one wants foreign exposure, the ETF is often preferable to finding individual stocks.

On the coal front, Tom Lydon has another interesting analysis as he notes the following:

Market Vectors Coal (KOL) got
another boost on Tuesday after the International Energy Agency reported
coal will be the world's biggest energy source for the next quarter of
a century. Since the fund's inception on Jan. 15 this year, it's up

Matthew Hougan at Seeking Alpha notes that the Coal ETF is near the top of the most successful ETF launches in 2008.

There is a lot of current debate about energy prices — speculation or fundamentals?  The portfolio has significant energy exposure.  It is the nature of our method, allowing the market to guide our strategy.  This means a consideration of technical analysis.

...and the Technicals

We are always interested in technical analysis of ETF's since our model has a technical basis.  Writing at Seeking Alpha, one of their featured technicians, David Fry, has some chart observations on RSX.  Take a look, and also enjoy his other ETF charts.

..and finally, the TCA-ETF System

As noted, the top sectors are even stronger.  Thirty-three of the fifty-one sectors in our universe have a "buy" signal, an improvement over the 27 from a week ago.

We are delighted to note the gains from two recent additions to the sector universe.  We continue to entertain reader suggestions about new candidates.

Displayed below is the current ranking, along with trades closed since the last update.


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One comment

  • Alisa May 27, 2008  

    Thank you for publishing such an informative and interesting blog. I have just started my journey into the stock market and have learned so much in such a short period of time. I find your blog very interesting.
    I do have one question though in records to the ETF Sector Report; would you mind briefly explaining the “strength” factor and it’s relationship to the “return”? Where does the “strength” factor come from?
    Thank you.