This Week’s ETF Winners – REMX, CPER, GREK
The Dow Jones Industrial Average hit an impressive milestone this week – Dow 15,000!
As I write, the blue chip average is up 2% for the week and an eye-popping 16% year-to-date.
Let’s take a closer look at three of the best performing ETFs this week…
Market Vectors Rare Earth/Strategic Metals ETF (REMX)
REMX’s 10% gain made it one of the top performing ETFs this week. But even after this week’s run-up, it’s still down 24% over the last year. Simply put, REMX has been one of the worst performing ETFs over the last 12 months.
What are rare earth and strategic metals?
According to Market Vectors, Rare earth/strategic metals are industrial metals that are typically mined as by-products in operations focused on precious metals and base metals. Compared to base metals, they have more specialized uses and are often more difficult to extract.
Currently, some 49 elements in the periodic table are considered rare earth/strategic metals, and include cerium, manganese, titanium, and tungsten. Strategic metals are used in myriad technologies such as jet engines, hybrid cars, steel alloys, wind turbines, flat screen televisions, and cellular phones.
Rare earth metals, a subset of strategic metals, are a collection of 17 chemical elements that are essential in many of today’s most advanced technologies, with particular applications in electronics.
So what happened to REMX?
The rare earth trade was hot in late 2010 and early 2011. At the time, China was threatening to cut off their supply of rare earth materials. And they had basically monopolized the market over the last decade.
As a result, the price of rare earths went through the roof. And companies that promised to replace the Chinese supply saw their stock price soar.
Well, the Chinese didn’t cut off their supply to the extent many expected. The price of rare earths plummeted and the stock price of rare earth companies dropped like a rock.
REMX has had bit of a bounce from deeply oversold levels this week. But this is more than likely a dead cat bounce rather than a reversal for this damaged industry.
United States Copper (CPER)
CPER has jumped 9% this week. But it’s still down 8% so far this year.
This ETF is designed to reflect the performance of the investment returns from a portfolio of copper futures contracts.
What’s driving Dr. Copper higher?
It’s no secret that copper is widely used in many sectors of the economy. So, copper prices are viewed as a reliable leading indicator of economic health.
The surge this week in copper prices is certainly tied to the better than expected US jobs report last week. If the global economy is picking up steam, then increased demand will drive the price of copper higher.
Global X Greece 20 ETF (GREK)
GREK has posted a solid 8% gain this week. And unlike CPER and REMX, GREK is now up year-to-date as well.
This is the only ETF designed to reflect the broad based equity market performance in Greece.
Obviously, investing in Greek stocks isn’t for the faint of heart. The country has been front and center in the European sovereign debt crisis.
At the peak of the crisis, Greek bank stocks were priced with the worst case scenario in mind. But over the last few months, we’ve seen stock prices bounce back.
The risk now is if more bad news hits the wires, that Greek banks and GREK could plummet right back to their recent lows.
But it’s not all bad news…
If GREK breaks above resistance around $20, it could bring more buyers to the table. And send shares of GREK up another 10% to 15% in the weeks ahead.
Here’s the upshot…
All three of these ETFs are showing strong gains over the last week. But you need to dig a little deeper to decide if they’re building bullish momentum or if they’re simply correcting from oversold levels.
Good Investing,
Corey Williams
Category: Commodity ETFs, Foreign Market ETFs, Sector ETFs
