ETF Trading Report: Consumer, Banking ETFs In Focus

Investors saw a rocky start to Friday trading, but this eventually gave way to a solid ending as hope for a Spanish bailout over the weekend spurred buying. This led to the best week so far in 2012 for the major indexes across the board, erasing some of the losses that investors have seen in weeks past.

Overall, the Dow and the S&P 500 both added about 0.8% while the Nasdaq gained nearly 1% on the session. Gains were led by those in the banking and staples sector, although green was pretty much across the board. Seemingly the only sector with any trouble was the basic materials segment, although restaurants were weak after a bad report from leader MCD.

In currency markets, the dollar strengthen marginally against the world’s currencies with the dollar index adding about 0.20 on the day. Meanwhile, Treasury bonds saw inflows to start the day but these gains were soon erased and most securities finished the day yielding about the same as their beginning of day levels (see 11 Great Dividend ETFs).

Commodity markets were also mixed as no real trend developed in the space. Oil and gold were down while softs were across the board once again; cotton and wheat were down, while sugar and corn finished in the green.

In ETF trading, volume was light across the board with many of the most popular equity products seeing lower-than-average trading levels. However, commodity trading levels were slightly above average while some interest was seen in the sector leverage space as well.

In particular, investors saw outsized activity in the leveraged consumer ETF space as represented by ( UCC - ETF report ) and ( UGE - ETF report ) . These products which target, respectively, consumer services and consumer goods on a daily leveraged basis, both saw more than 2.5 times their normal trading volume levels (read Understanding Leveraged ETFs).

Interestingly, in both products volume was non-existent for much of the day until a few large blocks in the final 80 minutes of trading. Possibly a single trader or group of traders sought to make a concentrated bet on the broad consumer sector heading into the close, implying that at least someone is looking for a bullish start to the week in this space.

Beyond these funds, investors also saw outsized interest in the session with the Market Vectors Bank and Brokerage ETF ( RKH - ETF report ) . This product usually sees volume of about 27,000 shares but experienced a spike to over 107,000 during Friday trading (see Three Financial ETFs Outperforming XLF).

Surprisingly, this came despite low levels of volume in the rest of the financial sector; many of the top products including XLF didn’t even see volume that hit their daily average. Instead, it appears as though a few traders sought to get concentrated exposure to this corner of the market during the mid-day period. At this time, a few block trades accounted for nearly all of the day’s volume before the close of the week.

(see more in the Zacks ETF Center)