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ETF Spotlight Newsletter
A sampling of research & data from AltaVista Research
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Chart of the week
Fund focus
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No. of ETFs
594

Total Mkt Cap ($bns)

$682.5

Avg. daily value traded ($bns)

$52.5
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November 22, 2010
Greetings!

Below please find the ETF Spotlight newsletter containing highlights of the research and data on www.etfresearchcenter.com as well as a recap of the past week's action in the ETF market. 

In this week's issue

technicianConfidence levels
  • Chart of the week: Confidence levels, Sector SPDRs
  • Fund Focus: Industrials Select Sector SPDR (XLI)
  • Revisions, asset flows & short interest
  • 2011 EPS estimates, growth rates, and P/E multiples for major ETFs
  • Market monitor - movers & categories
To download the full newsletter click here.

Chart of the week
Confidence levels, Sector SPDRs

All of the valuation metrics we report to readers are based on what is known as consensus estimates for things like sales and earnings. Consensus numbers are simply the average of figures contributed by all analysts who follow a particular stock. But what if the consensus is wrong? (Imagine that.)

To get an idea of how certain analysts are in their projections, we examined the standard deviation in estimates for 2010-11 EPS to see how wide the range of forecasts for stocks in each of the nine Sector SPDRs. We then subtracted this number from 100% to create a "confidence level," on the basis that if there were no disagreement among analysts (i.e., all EPS estimates were the same) we would have high confidence that the valuation metrics we calculate using these forecasts were accurate.
 
As you might expect, there is low confidence in estimates for the unpredictable Energy (XLE) and Financial (XLF) sectors, and high confidence in estimates for Health Care (XLV) and Consumer Staples (XLP). However, there is surprisingly high levels of confidence for the Basic Materials (XLB) and Industrials (XLI) sectors. The latter is showing the strongest estimate revisions among all Sector SPDRs, and is the subject of this week's Fund Focus.
 
Download the full newsletter here.  

Chart: Confidence levels, Sector SPDRs
100% minus std. dev. in 2010-11 EPS estimates
confidence_levels

Fund Focus
Industrials Select Sector SPDR (XLI)industrials

Sales may pick up modestly this year and next after a devastating double-digit decline in 2009, and with capacity utilization starting to recover margins could improve as well. Expectations have improved markedly in recent months. Still, return on equity is likely to recover only gradually, and in any case valuations appear to already reflect an eventual recovery, resulting in a roughly average ALTAR ScoreTM and risk/reward profile for this cyclical sector.

To download the full newsletter, click here.

As always your questions & feedback are most welcome.
 
Sincerely,
 
Michael Krause
AltaVista Research