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ETF News And Commentary

Eric Dutram

ETF Trading Report: Coal, Health Care ETFs In Focus

KOL IYH

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U.S. stocks started the last week of the quarter on a down note as European events continued to dominate the headlines. Now, it appears as though tiny Cyprus will also seek a bailout while hopes for the EU summit were dashed as the Greek Finance Minister resigned, and Merkel appears unlikely to do more in terms of helping struggling EU members, at least in the near term.

Thanks to this, American securities followed their European counterparts lower as the Dow slumped by 1.1% while the S&P 500 and the Nasdaq tumbled by respectively, 1.6% and 2.0% to start the week. Red was seen pretty much throughout the market, although basic materials, financials, and technology clearly led on the downside while staples, health care, and utilities lost less than most on the day.

Given the general risk off trade, investors shouldn’t be surprised to note that the U.S. dollar index again advanced on the day, led by strength against the euro, although weakness was seen against the yen. Meanwhile in bond markets, the 10 year saw yields fall to just 1.61% while the 30 year saw yields sink to just 2.68% on the day (see Get True Emerging Market Exposure With These Three ETFs).

Commodity markets were flat to positive on the day as most energy products rose—with the exception of WTI crude—while precious metals also performed well across the board. In soft commodity trading, investors saw great performances in the grains market as the hot weather pushed corn and wheat up more than 7% on the day, as fears over a smaller supply sent these key products surging higher to start the week.

ETF trading was relatively light in most of the major products as those tracking popular indexes and commodities saw lower-than-average volume levels. However, investors did see a higher level of interest in some country-specific funds as well as a few sector ETFs to open up the week (read Insider ETF Showdown).

In particular, ETF investors saw an outsized level of interest in the most popular coal ETF on the market, the Market Vectors Coal ETF (KOL - ETF report). This fund usually sees about 183,000 shares in volume but experienced a large spike to nearly 2.2 million shares on the day (see Is Now The Time To Buy The Coal ETFs?).

However, although the fund was volatile—finishing the session down 3.2%-- the vast majority of trading came in two blocks just minutes apart in the first hour of the day. In that time period, a 1.8 million block and an 189,000 share block moved hands, accounting for nearly all of the volume on the day.

Another ETF which was in focus during Monday’s session was the iShares Dow Jones US Healthcare Fund (IYH - ETF report). This ETF usually does volume of about 40,000 shares but surged to just under 160,000 shares in the session (see Three Low Beta Sector ETFs).

This bump in volume came along with more interest in a number of other health care focused ETFs as speculation over a possible Thursday Obamacare ruling reaches a fevered pitch. Still, this ETF lost about 1.3% on the day, more than the overall market, possible suggesting that the outcome for the important decision is still uncertain, or that it could be a negative for the broad health care space.

(see more on ETFs at the Zacks ETF Center)

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