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ETF Trading Report: Timber, Oil Service ETFs in Focus

Eric Dutram

Stocks had yet another low volume session and ended up going nowhere for the most part of the day. Overall, all three of the major indexes were up, although just slightly so as the S&P 500 and Nasdaq both were up 0.1% while the Dow squeaked by with a four point move higher.

There were few clear winners and losers from a sector look, although the energy market was definitely a loser along with utilities, while banks, tech, and health care were largely in the green today. In terms of big winners in the large cap space, GOOG added about 1.6% while KO was down 1.4% in Wednesday trading (see Three Best Performing Small Cap Growth ETFs).

In dollar trading, the greenback rose a tad, adding just about 0.2% when compared to the rest of the world’s major currencies. However, the U.S. Treasury note did see a modest increase in yield today, adding two basis points while other safe haven bond markets also saw yields trend higher on the day as well.

Hurricane Isaac remained the focus of much of the commodity world, as the storm made landfall on the Louisiana coast. Energy trading was mixed as WTI crude fell by about 1.3%, while natural gas added 2.1% on the day. Meanwhile, most soft commodities did rise on the day—lead by wheat and corn—while the metals market was weak, with all the top products in this segment slumping in mid-week trading (also read Bet on a Gold Comeback with the Gold Explorers ETF).

Unsurprisingly, ETF trading volume levels were pretty light once again today, as ETFs like SPY and DIA saw activity that was about half the daily normal levels. However, commodity trading volumes were decent, as most products saw activity that was at least in line with historical averages.

One ETF that saw a great deal of volume in today’s session was the PowerShares Dynamic Oil & Gas Services Fund (PXJ). This product usually does about 30,000 shares in volume a day but saw a spike to just over 780,000 shares, a nearly 20x increase (see Time to Buy Oil & Gas Service ETFs?).

Interestingly, the fund still lost about 1% on the day and most of the volume came in a huge block trade which hit the market at around 10am. Traders were undoubtedly focused in on this fund thanks to the hurricane, and the, so far, lack of devastating damage to the nation’s oil infrastructure in that region. Without more damage, it looks like demand for oil services could be low, pushing this fund lower today and possibly into Labor Day weekend as well.

Another ETF that saw an unusual amount of volume today was the Guggenheim Timber Fund (CUT). This product usually does about 40,000 shares in a normal day but saw roughly 3x this level today (read Timber ETFs to Benefit From Housing Recovery).

A large reason for this outsized trading could also be the hurricane and its impact on timberlands in the path of the storm as well as housing demand after the damage is realized. Probably, the storm isn’t as bad as everyone feared, at least from this angle, sending shares of CUT down about 0.8% on the day.

(see more in the Zacks ETF Center)

Read the analyst report on PXJ

Read the analyst report on CUT

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