Wachovia (WB) reported a surprise first-quarter loss, hitting financial exchange traded funds (ETFs) hard.

The Regional Bank HOLDRs (RKH) fell to its lowest point since March 17, reports Wanfeng Zhou for Thomson Financial. Wachovia is the fund’s third-largest holding, with 10.3% of assets.

The iShares Dow Jones U.S. Financial Services (IYG) also dipped to its lowest point since March 17. Wachovia makes up 3.7% of the fund.

The Financial Select Sector SPDR (XLF) also fell to its lowest price since April 1, and it has lost 6.7% since April 7, the last day it posted a gain, reports Tomi Kilgore for Thomson Financial. Wachovia is 3% of the fund, its eight-largest component.

While liquidity in the credit markets is improving, the crisis isn’t over, reports Ed Carson for Investor’s Business Daily. Some experts are saying "the worst" is over, mostly based on the fact that the Federal Reserve is allowing investment banks to borrow directly from them for the first time since the Great Depression.

The easiest way to know when you should get back in is to wait until these funds cross back over their trend lines (200-day moving average). Right now, the funds we mentioned above are sitting far below that key point:

  • RKH, 13.1% below; down 9.8% year-to-date
  • XLF, 16.1% below; down 13.4% year-to-date
  • IYG, 9.9% below; down 14.6% year-to-date


The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.