A reputable biotechnology company has filed for Chapter 11 this week, deCODE Genetics Inc (NYSE: DCGN), the company that famously compiled the genetic code of nearly every Icelander for research. The company crushed under $200 million in debt and investors may have to call it a wash, reports Brettt Arends for The Wall Street Journal. (What does biotech need to thrive?)

For other companies in the sector, the outlook is looking brighter. IPOs are coming back and some of the speculative companies have surged off their lows.

Talecris Biotherapeutics (NYSE: TLCR) just raised $950 million, a sign that investors are ready to wade back into the markets again.

Biotech can be a risky sector with mixed investment results. Many companies are working on projects that may one day bring profits, but those projects may not see the light of day for years, if ever.

That’s where ETFs come in. How can anyone know which biotechnology companies will be winners in the long run? ETFs help spread out the risk and eliminate the need for guesswork and single-stock picking. (Read more about the biotechnology sector).

If you decide this sector is right for your investment needs, go in with a strategy in place and a stop-loss in mind. (How to follow the trends).

For more stories about biotechnology, visit our biotechnology category.

• PowerShares Dynamic Biotech & Genome (NYSEArca: PBE): up 18.2% year-to-date

• SPDR S&P Biotechnology (NYSEArca: XBI): down 4.5% year-to-date

In an interview with Gary Shilling, Heesun Wee of Tech Ticker states that Shilling believes deflation is inevitable because of technological advances boosting productivity, globalization and weak demand for U.S. consumer goods.  He suggests these factors could lead to higher inventories and cut about 1.5% off real U.S. GDP growth each year.

If this is the case, you don’t have to run for the hills, as there are ways to hedge deflation with ETFs.  A common place to look is at high-dividend paying investments, such as utilities, which can be accessed through the Vanguard Utilities ETF (VPU), up 5.1% year-to-date (More reasons to look at utilities).

Another good sector to consider is health care. (More reasons health care is appealing).  This can be played through the iShares Dow Jones U.S. Healthcare Providers (NYSEArca: IHF), which is up 28.3% year-to-date.

For more stories on health care, visit our health care category.

Consumer staples are also an option to hedge deflation. The unemployment rate is at a 26-year high, which means that there are still millions of people feeling the pinch. When they shop, they’re looking for what they need, not what they want. Consumer Staples Select Sector SPDR (NYSEArca: XLP) is up 15.4% year-to-date.

If deflation does become a factor, the dollar should begin an uptrend. If this happens, a potential play could be the PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP), which is down 9.4% year-to-date.

Kevin Grewal contributed to this article.

ETFs are a good way for investors to capitalize on policy initiatives of the Obama administration while reducing the day-to-day volatility compared to other investment options, such as stocks, remarks Daniel Harrison for IndexUniverse. (Play Obama’s new energy plan).

Health Care opportunities. Jim Oberweis, chief executive of Oberweis Asset Management, believes that “there is a possible positive [outcome] for pharmaceutical companies” since sales of prescription drugs will increase as health care coverage widens. Furthermore, Oberweis argues that health care providers may benefit from more patient visits and biotechs are in a more positive position than previously thought. (More on the health care sector).

Broad-based and niche market ETFs that could benefit from the growth in the number of patients receiving coverage include:

• Health Care Select Sector SPDR (NYSEArca: XLV): up 14.3% year-to-date
• iShares Dow Jones U.S. Healthcare (NYSEArca: IYH): up 15.1% year-to-date
• iShares Dow Jones U.S. Medical Devices (NYSEArca: IHI): up 32.4% year-to-date; IHI is well-diversified, with 58% of assets under management in its top 10 holdings, and a maximum single-stock weighting of 10%. Companies included should benefit from the increase in the number of hospital patient visits.
• PowerShares Dynamic Pharmaceuticals (NYSEArca: PJP): up 10.3% year-to-date; PJP is a well-diversified ETF on large, mostly dividend-paying pharmaceutical companies that have lots of cash on hand and may see an increase in sales of core prescription drugs.
• SPDR S&P Pharmaceuticals (NYSEArca: XPH): up 19.2% year-to-date; XPH is more broadly diversified.
• iShares Dow Jones US Pharmaceuticals (NYSEArca: IHE): up 22.2% year-to-date; IHE focuses more on the oversold traditional pharma brands like PJP.
• SPDR S&P Biotech (NYSEArca: XBI): down 4.3% year-to-date; XBI is well-diversified, with 45% of its funds invested in its top 10 holdings. The fund is also mostly invested in nontraditional pharma companies.
• iShares Nasdaq Biotechnology (NasdaqGM: IBB): up 11.2% year-to-date; IBB has a higher weighting in its top holdings and it focuses exclusively on Nasdaq-listed securities; some large biotech companies may be excluded.

Clean energy. It is no big secret that clean energy is a big policy initiative of the Obama administration. The more notable technologies being pushed into the forefront of the sector are nuclear and solar energy. Solar tech investing is still considered risky because of the industry’s mini boom/bust cycles, but ETFs help minimize volatility. (More on alternative energy).

• Market Vectors Solar Energy ETF (NYSEArca: KWT): down 6.5% year-to-date
• Claymore/MAC Global Solar Energy (NYSEArca: TAN): up 0.3% year-to-date
• Market Vectors Nuclear Energy ETF (NYSEArca: NLR): up 19.7% year-to-date

Max Chen contributed to this article.

We are about two steps away from health insurance reform in America, says Obama. Stephanie Condon for CBS News reports that Democrats in the House managed late Saturday night to pass their comprehensive health care bill by a vote of 220 to 215. Meanwhile, 39 Democrats voted against the bill, even after adding to the legislation a strict anti-abortion measure intended to earn the support of moderates.

Don Dion for TheStreet reports that even as public support for the health care bill wanes, there’s hope yet for the sector’s ETFs. (Why health care reform still looks good). The downward trend for providers could reverse as voters turn their backs on the ambitious health care overhaul. Voters are apparently dissatisfied with Obama’s policies.  (How has health care affected ETFs so far?)

On the other hand, if health care reform goes through, some ETFs could see their holdings change as some constituents are legislated out of existence by the new laws.

As the health insurance and health care industry stand to gain from about tens of millions of customers, the industry is still complaining. Duff Wilson and Reed Abelson for The New York Times report that insurers do not like the idea of a government-run insurance program. Drug makers oppose billions of dollars in rebates they would have to give to the government over 10 years. Meanwhile, medical device providers would have to give a 2.5% tax to the government on their products. Also, employers large and small oppose rules that, for many of them, would make health care coverage — long a job benefit — become a federally-mandated obligation.

For more stories about health care, visit our health care category.

• iShares Dow Jones U.S. Health Care Providers (NYSEArca: IHF): up 26.9% year-to-date

• PowerShares Dynamic Health Care Services (NYSEArca: PTJ): up 10.3% year-to-date

Warren Buffett’s company Berkshire Hathaway (NYSE: BRK-A) announced this week that it plans to buy Burlington Northern Santa Fe (NYSE: BNI) for $100 a share, writes Jack Hough for SmartMoney. Buffett named rail car loadings as his favorite economic indicator.

• iShares Dow Jones Transportation Average (NYSEArca: IYT): up 7.2% year-to-date ; BNI is 11.4%

According to records, Berkshire Hathaway sold shares of Moody’s (NYSE: MCO) after the ratings firm signed off on mortgage securities that turned toxic. During the second quarter, Berkshire dumped Constellation Energy (NYSE: CEG) and reduced holdings in ConocoPhillips (NYSE: COP), Home Depot (NYSE: HD) and United Health Group (NYSE: UNH). The money was used to purchase preferred shares of General Electric (NYSE: GE) and Harley Davidson (NYSE: HOG).

• Vanguard Industrials ETF (NYSEArca: VIS): up 12.5% year-to-date; GE is 12.5%

• First Trust Large Cap Value Opp AlphaDEX (NYSEArca: FTA): up 28.5% year-to-date; HOG is 1%

Berkshire also bought two common stocks that are more widely available: Becton Dickinson (NYSE: BDX), distributor of medical supplies,  and Johnson & Johnson (NYSE: JNJ), maker of drugs, consumer products and medical supplies. Value investors should noted that both BDX and JNJ have increased dividends each year for more than three decades. (How healthcare overhaul affects ETFs)

• iShares Dow Jones U.S. Healthcare (NYSEArca: IYH): up 10.3% year-to-date; BDX is 1.2%

• Pharmaceutical HOLDRs (AMEX: PPH): up 3.5% year-to-date; JNJ is 25.2%

Max Chen contributed to this article.

Although several sectors have notched strong third-quarter performance, the ones listed below are among the standouts. For more stories on sector ETFs, visit our sector ETF category.:

1. Technology. Apple (Nasdaq: AAPL) is the latest big tech name to post strong earnings. The maker of the popular iPhone posted a 47% gain in profit, taking investors and analysts by surprise. Shares were up 5.4% as of Tuesday, reports Jessica Mintz for the Associated Press.

Other technology companies posted strong earnings, as well. (Read about them here).

• Technology Select Sector SPDR (NYSEArca: XLK): up 40.3% year-to-date; Apple 8.1%

• FirstTrust NASDAQ -100 Tech Index (NYSEArca: QTEC): up 67.6% year-to-date; Apple 2.7%

2. Pharmaceuticals. The sector came out a winner in the health care bill that went through the finance committee last week. Pfizer (NYSE: PFE) reported a 26% higher profit, but lower sales. The world’s largest drug maker posted net income of $2.88 billion, or 43 cents a share, even as many patents have been expiring, reports Val Kennedy for MarketWatch.

• iShares Dow Jones U.S. Healthcare (NYSEArca: IYH): up 14.2% year-to-date; Pfizer is 10.6%

• Vanguard Health Care (NYSEArca: VHT): up 15.3% year-to-date; Pfizer is  7.5%

3. Fast Food. McDonald’s (NYSE: MCD) and Yum Brands (NYSE: YUM) have weathered the recession nicely, as price-aware consumers stop going out to sit-down restaurants. Yum Brands has continues to thrive; its third-quarter earnings rose 18% thanks to lower costs that helped the company earn a profit in both the United States and China. McDonald’s announces earnings on Thursday.

• PowerShares Dynamic Food And Beverage (NYSEArca: PBJ): up 10.8% year-to-date; Yum 4.7%; McDonald’s 4.5%

The U.S. Senate Finance Committee approved its version of legislation to overhaul the nation’s $2.5 trillion health care system.

Matt Phillips for The Wall Street Journal reports that following the official vote moving the bill out of the committee, health shares moved even lower. Unfortunately, the S&P Health Care Sector index is the worst-performing segment of the S&P 500, knocking the financial sector off from the top position. (Read why health care ETFs still have appeal).

Health insurers took the biggest decline after the vote, which pharmaceuticals close behind. The Standard & Poor’s pharmaceutical index is down 1.5%, outpacing the declines in the health care index and the S&P 500.

Leslie Gevirtz for Reuters says there are both winners and losers in the current bill.

Winners:

• Drugmakers/Pharmaceuticals. The pharmaceutical sector managed to keep an $80 billion rebate agreement while also successfully heading off a fight that would have required some of its largest players to give back another $106 billion in additional rebates over 10 years. Pharmaceuticals can be played with the PowerShares Dynamic Pharmaceuticals (NYSEArca: PJP), which is up 9.7% year-to-date.

• Hospitals. Hospitals kept intact a $155 billion, 10-year deal to accept lower payments from Medicare and Medicaid. Some hospitals can be found in the iShares Dow Jones U.S. Healthcare Providers (NYSEArca: IHF), which is up 18.9% year-to-date.

Losers:

• Health Insurers: While the industry successfully fought amendments for a government-run program, it still faces more than $6 billion in yearly fees. Vanguard Health Care (NYSEArca: VHT) is up 12.3% year-t0-date.

• Device makers: Device makers are facing a $4 billion yearly fee, although analysts feel that this feel could be reduced. iShares Dow Jones Medical Devices (NYSEArca: IHI) is up 29.9% year-to-date.

For more stories about health care, visit our health care category.

Johnson & Johnson (NYSE: JNJ), which makes Band-Aids and the Acuvue brand of contact lenses, reported better-than-expected earnings but just missed the revenue forecast, reports Linda A. Johnson for the Associated Press. Pharmaceutical sales dropped 14.1% because of increased generic competition. iShares Dow Jones U.S. Pharmaceuticals (NYSEArca: IHE) is down about 0.6% this morning. JNJ is 8%.

Gold hit an intraday price record, surging as high as $1,069.70 an ounce. Many analysts expect the price of gold to continue to rise into next year, reports Ben Rooney for CNNMoney. The weakening U.S. dollar has lent support to gold’s run-up. Have a strategy when investing in gold, and be sure to set a stop loss that you can execute when the time comes. Read how here. SPDR Gold Shares (NYSEArca: GLD) is up nearly 0.5% this morning.

The euro has jumped to its highest level against the U.S. dollar since September 2008 as investors seek out higher yields, reports Nicholas Hastings for The Wall Street Journal. The eurozone’s currency is on its way toward $1.50. CurrencyShares Euro Trust (NYSEArca: FXE) is up about 0.25% in morning trading. Read about how to incorporate currencies into your portfolio here.

Cisco (Nasdaq: CSCO), the world’s largest manufacturer of networking equipment, is buying Starent Networks Corp. for $2.9 billion. This is Cisco’s second multibillion-dollar buy in less than two weeks, reports Rochelle Garner for Bloomberg. iShares S&P North America Tech-Multimedia Networking (NYSEArca: IGN) is up about 0.2% this morning.

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.

For full disclosure, Tom Lydon’s clients own shares of GLD.

A busy week of economic data is expected on Wall Street this morning, and it could soon sharpen the picture for investors. One of the major reports expected is the monthly reading on the job market, which will be out on Friday. Unemployment is considered one of the biggest hurdles the economy has yet to overcome, reports Sara Lepro for the Associated Press.

Also upcoming this week include home prices, manufacturing, consumer confidence, construction spending and factory orders. There are also going to be some updated outlooks from companies before the third-quarter earnings season kicks off.

Xerox (NYSE: XRX) recently announced that it will purchase Affiliated Computer Services (NYSE: ACS) in a $6.4 billion cash and stock deal, which will enable Xerox to expand into technology and data management. Additionally, pharmaceutical company Abbot Laboratories (NYSE: ABT) announced that it will purchase Brussels drug company Solvay, giving Abbot full control of its Belgium development partner’s cholesterol departments and exposure to emerging markets. The news sent the SPDR S&P Pharmaceuticals (NYSEArca: XPH) up 2% in morning trading.

In other news, crude oil edged above $66/barrel on the New York Mercantile Exchange as the dollar gave up most of its earlier gain against a basket of currencies, boosting the appeal of oil and commodities to investors. The news sent the United States Oil Fund (NYSEArca: USO) up 1.3% in morning trading.

Overall, all three major U.S. indexes were in positive territory this morning, with the Dow Jones Industrial Average up 1.3%, the S&P 500 adding 1.5% and the Nasdaq jumping 1.9%.

For more news on crude oil, visit our oil category.

For a majority of companies, third-quarter results could be below those of 2008, with per-share profits for the S&P 500 at a projected drop of 15.4%. More than 340 businesses could see a year-over-year drop in profits, according to Zacks. Projected revenues show median company sales may drop 7.2%, with more than 360 companies expected to experience a year-over-year drop in earnings.

There are a lucky few that are forecasting actual earnings growth compared to last year:

Homebuilders. First off, conditions were already deteriorating and mortgages were hard to come by last year. Secondly, more new and existing home sales translates to a more stable housing market.

• SPDR S&P Homebuilders (NYSEArca: XHB): up 35.4% year-to-date

Insurance. Insurance companies can potentially pull off double-digit growth. Some firms can bounce back higher from prior-year losses while others may see true growth. Property and causality insurers have been sparred by a calm hurricane season so far, and most insurers benefited from a recovering financial market.

• KBW Insurance (NYSEArca: KIE): up 33.2% year-to-date

Health Care. The medical sector is still raking in the profits. The sector is not correlated to commodity prices and is less economically sensitive. The result is that medical companies are showing both revenues and earnings growth this quarter.

• Vanguard Health Care (NYSEArca: VHT): up 12.7% year-to-date

On the flip side, here are a few sectors that could report contractions:

Commodity. Commodity-related companies reported strong profits last year and as a result, energy and metals companies may show drops in third-quarter profits this year.

• iShares Dow Jones U.S. Oil & Gas Ex Index (NYSEArca: IEO): up 33.8% year-to-date

• PowerShares DB Base Metals (NYSEArca: DBB): up 53.7% year-to-date

Banks. Many banks still remain unprofitable. High joblessness, high level of foreclosures and poor real estate market all affect banks. The result is a projected report of losses for the sector.

• iShares Dow Jones U.S. Financial Sector Index Fund (NYSEArca: IYF): up 20.1% year-to-date

Max Chen contributed to this article.