ETF Trends
ETF Trends

Once again, the Dow 30, some exchange traded funds (ETFs) and specific sectors have hit those devastating lows of November 2008, that we all prayed were just history.  But on the bright side, there are some indicators, the ones that the average Joe Blow doesn’t look at, that suggest that this wrenching pace of the downturn may be on the decline. Take a look at these optimistic numbers and statistics:

  • According to the Institute for Supply Management, manufacturing shrank at a slower rate in January than it did in December and new orders slightly increased. If interested, look at the iShares Dow Jones US Industrial Index (IYJ), down 8.1% over the last 3 months.
  • The Commerce Department reported that retail sales were up 1% in January, a small incline after seeing six straight months of a decline.Take a look at the Retail HOLDRs (RTH), down 0.1% over the last 3 months.
  • The National Association of Home Realtors boasted that sales of existing homes jumped 6.5% in December, mainly due to attractive mortgage rates; take a look at the SPDR S&P Homebuilders (XHB), down 2.5% over the last 3 months.
  • Consumer credit slid 3.1% in December as compared to 5.1% in the previous month, indicating that Americans are starting to shun away from their plastic, indicating that consumers are just not spending or they are relying on cold hard cash
  • Trade volume only declined by 5.7% in December, far better than the 9.4% decrease seen in November
  • The Baltic Dry Index, an index that measures the costs of shipping raw goods like copper, steel and iron more than doubled from its lows, showing signs of increasing demand, states Jack Healy for The New York Times. Although there isn’t an ETF that specifically tracks the Baltic Dry Index, take a look at Claymore/Delta Global Shipping (SEA), it is up 6.8% over the last 3 months.
  • The three-month London interbank offered rate, which measures how much banks charge each other to borrow, is around 1.2%, down immensely from its 4.5% level during the height of the crisis.

Although these are indicators that things are slowing down, which is a good thing, keep in mind that everything can’t keep moving at the speed of light.

With this in mind, the credit markets are still fragile, fraud and deception is still being discovered, and unemployment rates are still on the rise. Hopefully yesterday’s market performance wasn’t much of an indicator of the influence and reaction that President Barack Obama’s stimulus package will have. We can just hope for the best and be smart investors.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.