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ETF News And Commentary

In this new segment, we will take a closer look at two ETFs which are seeing outsized trading volumes. Let us know what you think!

U.S. equity markets finished the holiday-shortened week on a choppy note as the Dow and S&P 500 ended in the red while the Nasdaq added 12 points on the day. Commodities, however, saw strong performances as gold and oil both gained more than 1% despite a slightly stronger U.S. dollar.

In bond trading, the 10 year note saw yields fall by about four basis points, leaving the benchmark note yielding just under 2.2%. Meanwhile, the dollar did manage to firm against the euro and the pound although the yen did add marginally against the greenback in today’s trading.

In terms of ETF trading, several funds in the European category saw heavy volume as traders continue to speculate over the health of the PIIGS nations and how this will impact other nations in the area. One product that was especially in focus was the iShares MSCI Belgium Index Fund (EWK - ETF report) which saw trading of 360,000 shares, well above the usual 40,000.

This large increase was likely due to the broad European worries and some investors taking short positions in the fund. In fact, the product currently has 12% short interest, representing seven days to cover at normal trading levels (read Three European ETFs Beyond The Euro Zone).

Additionally, some investors are also likely focusing on the country as another weak market that could feel the pain next. Belgium also has a terrible budget situation although it is better than many of the PIIGS. Thanks to this and the small size of the country, the worst has been avoided so far although we could be in the early stages of a reversal; the fund was down 1.4% in Thursday trading.

Another fund that saw a huge increase in trading volume on the day was the iShares S&P North American Technology Sector Index Fund (IGM - ETF report). The ETF usually trades around 30,000 shares in a normal session but today saw almost 400,000 shares change hands.

The reason for the spike was unclear as many of the other tech focused ETFs had trading volumes that were in-line with their traditional averages. Furthermore, the product focuses on large cap stocks which are widely held across a number of other funds, both in the tech and broad market worlds (see Three Tech ETFs Outperforming XLK).

Lastly, the product saw mostly flat trading, as the ETF only added about 17 cents on the day, roughly 0.2%. However, given the huge spike in volume, this may be a fund that investors should keep their eye on after the long-weekend as we could see more volatility from traders who piled into this product ahead of the end of this week’s trading sessions.

Make sure to check out the Zacks ETF Center for more information on all of your favorite ETFs.

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