Deutsche Boerse and SIX Swiss Exchange have announced that they are buying out Dow Jones’ one-third stake in Stoxx for a consideration of 206.1 million euros, or $306 million.

Following the transaction’s completion, which is due to take place early next year, Deutsche Boerse will have a controlling stake in Stoxx of 50 percent plus one share and will fully consolidate it for accounting purposes.

In addition, SIX and Deutsche Boerse will set up a new entity to perform index calculations, in which SIX will own 50 percent plus one share.

According to a Stoxx press release, the transaction will allow both Deutsche Boerse and SIX to significantly expand their positions in the international index business, complementing their established DAX and SMI index families.

The sale could be a precursor to the long-rumored sale of Dow Jones Indexes. The Wall Street Journal reported in August that News Corp. was considering selling the venerable index provider, which has annual revenues of approximately $130 million to $170 million.

• Kohl's (NYSE:KSS) reported results of 63 cents a share, above Zacks estimates of 61 cents, on revenues of $4.1 billion, above Zacks projections of $4 billion

• Banking analyst Richard Bove strongly advised purchase of Bank of New York Mellon (NYSE:BK) shares, saying the firm's multiple should be twice current levels due to growth prospects

• Motorola (NYSE:MOT) is considering sale of its Home and Networks Mobility division as part of its turnaround plan. Analysts value the unit at $3-$5 billion

• Hewlett-Packard (NYSE:HPQ) said it agreed to acquire 3Com (NASDAQ:COMS) for $7.90 per share, in a deal valued at about $2.7 billion in cash. The company also posted preliminary fiscal fourth quarter results and raised 2010 guidance

• United Technologies (NYSE:UTX) agreed to purchase GE's (NYSE:GE) security business for $1.82 billion

• Reports said Microsoft's (NASDAQ:MSFT) new Bing search engine has been gaining market share against competing Google (NASDAQ:GOOG) and Yahoo (NASDAQ:YHOO)

• According to a WSJ report, News Corp's (NASDAQ:NWSA) Dow Jones is close to a sale of stake in its stock indexing unit, Stoxx Ltd, for $309 million

• Applied Materials (NASDAQ:AMAT) reported better-than-anticipated fiscal fourth quarter earnings of 13 cents, 10 cents above projections, on revenues of $1.53 billion, which topped estimates of $1.32 billion. The firm anticipates 30% 2010 revenue growth; layoffs of 1300-1500 over the next year are planned

• Clearwire (NASDAQ:CLWR) posted a third quarter loss of 43 cents a share, versus Zacks estimates of a 45 cents loss as revenues increased 13.2% to $68.8 million, slightly ahead of Zacks estimates of $68 million.  The firm maintained 2009-2010 guidance, and plans new $1.564 billion in equity financing

• Ralcorp (NYSE:RAH) reported earnings of $1.14 a share ex-items, versus Zacks estimates of $1.24, on revenues of $983.2 million, up 12.6% YoY, off Zacks estimates of slightly above $1 billion

Bob Holderith is chief executive of Emerging Global Advisors. Richard Kang is chief investment officer for the New York-based company, which recently launched the first exchange-traded funds focused on specific sectors in emerging markets. (See related story here.)

EGA is expected to launch soon a third ETF that will act as a composite of the 10 underlying sectors in the Dow Jones emerging markets indexing series it’s using for current and upcoming funds.

The company says that nine more are in the works focusing on emerging markets sectors. Those will join the May launches of the EGS Emerging Markets Energy Fund (NYSE Arca: EEO) and the  EGS Emerging Markets Metals & Mining Fund (NYSE Arca: EMT).

IndexUniverse.com’s Murray Coleman caught up with Holderith and Kang late Thursday to discuss the future of sector investing in developing markets.

IU: What is available for U.S.-based investors in terms of foreign sector ETFs now?

Holderith: The family of Select Sector SPDRs is the dominant ETF line providing sector-based exposures.  They’ve got a long history. But those ETFs only focus on U.S. companies. For pure international exposure to foreign sectors, we’ve only seen two-  to three- years worth of actual performance history. And that’s through the iShares’ global sector family of funds as well as those of State Street Global Advisors. The SSgA  family is purely international sector ETFs.

IU: Then your firm’s line-up of international sector ETFs will compete most directly against those of SSgA?

Kang: No, since the SSgA ETFs are focused predominately on developed markets. For example, take the SPDR S&P International Financial Sector (NYSE: IPF). The top weighted countries are (in order): Japan, Canada, Australia, the U.K., Spain and Switzerland. The SSgA international sector ETFs do allow for some emerging markets exposure. But as cap-weighted indexes, they’re heavily skewed to developed countries.

IU: Why is your company going with pure emerging markets exposure rather than a mix of developed and emerging markets?

Holderith: There’s more than enough coverage of developed international markets now in the ETF marketplace. In terms of emerging markets, we’ve seen broad, regional and country specific funds. But we’re first to market with sector-specific ETFs for developing countries. The EMT and EEO ETFs are the first of a series we’re preparing to launch.

IU: What others are planned?

Holderith: We’ve got in the pipeline 10 ETFs still left to bring-to-market. Those will all use Dow Jones indexes, similar to those used by EMT and EEO. Dow Jones uses a classification system for sectors called the ICB (or industry classification benchmark) system. The other sector-specific ETFs in various stages of planning we’re working on launching cover: basic materials; consumer goods; consumer services; financials; health care; industrials; technology; telecom and utilities.

IU: You’ve also got a broader ETF that has received regulatory approval, don’t you?

Holderith: Yes, we’ve got a composite ETF that’s due to launch within the next few weeks.  That’s an ETF tracking a Dow Jones index that takes the top 10 names from each of the 10 major emerging markets sectors. (It won’t include metals and mining, which is a subsector of basic materials.)  So that will leave 100 names in the underlying composite index. And as in all of our ETFs, we have a rule that caps individual weightings at no more than 10%.

IU: In the composite index for such an emerging markets fund, what would the sector weightings look like then?

Holderith: Oil and gas along with financials are the dominant sectors in the composite index.

IU: What type of performance have you seen through back-tested data for emerging markets sector indexes compared to developed markets sector indexes?

Kang: We have data going back many years for the underlying benchmarks. The data for emerging markets, however, isn’t as robust as that for developed markets. So we really focus on data going back to December 2005 when comparing the Dow Jones composite benchmark we’re using for our emerging markets sector funds.

IU: What do those comparisons show?

Kang: Going back to 2005, returns were generally spectacular up through 2007 for emerging markets vs. developed markets. In the latter half of 2008, we saw greater volatility and bigger losses in emerging markets. As with any more volatile asset class, emerging markets offers the potential for greater long-term gains as a result. Clearly, some sectors performed better in relative terms during the periods when markets were going up versus others.  The same is true in the bear market of 2008.  That is the essence of the popularity of sector funds -- their selection during different stages of the market cycle.

IU: How correlated are emerging markets sectors to developed markets sectors?

Kang: That’s a tricky question. It depends on your timeframe. In statistical terms, there’s just not a lot of data. But you can draw some general conclusions. There are times, like in the bull market from 2005-2007, when many sectors in emerging markets and developed markets were highly correlated. Commodity stocks were highly correlated during the commodities boon regardless of location. On the other hand during the credit crisis, financials haven’t been as highly correlated because banks in the U.K, for example, have been exposed to more toxic assets than banks in places like China, Brazil and India.

IU: What do you see as the biggest benefits of breaking emerging markets into sectors?

Kang: A lot of investors managing their emerging markets exposures are doing so by allocating between countries. The question we asked at the very beginning of creating our ETFs is how much overlap there is between sectors and geography.

Let’s say you’re an American investor with heavy exposure to the S&P 500 index. Maybe you’ve tilted your  portfolio a little to commodities through funds such as the SPDR Gold Shares (NYSE: GLD) and the iPath Dow Jones-AIG Commodity Index ETN (NYSE: DJP). If you’ve got that portfolio, you look more like a Canadian or an Aussie – both of those countries are heavily influenced by movements in natural resources prices.

IU: In other words, broader-based ETFs don’t add a lot in those situations?

Kang: The inclusion of broad emerging market ETFs as well as many of the country specific ETFs to this kind of portfolio would not provide diversification as correlations would be surprisingly high.  For true diversification, the inclusion of certain sectors would likely provide more optimal risk-return characteristics to the overall portfolio.

Furthermore, many investors who invest in emerging markets country ETFs do so based on a sector-type of rationale. For example, let’s say someone wants to invest in Russia. The question I would ask is: Do you want to invest in that country to be more richly compensated with some sort of political risk associated with that country? Or, are you investing in Russia to make an oil and gas bet? If that’s the case, do you want to put all your eggs in one basket – Russia. Or, would you prefer to invest in a basket focused on oil and gas but with companies from Russia, India, China, Brazil and several others?

IU: Those are the top countries in EEO, aren’t they?

Kang: Yes. Those four countries comprise roughly two-thirds of the fund. And with EMT, the top countries are: South Africa, Brazil, China and Russia. Those take up more than three-quarters of the fund.

Bob Holderith is chief executive of Emerging Global Advisors. Richard Kang is chief investment officer for the New York-based company, which recently launched the first exchange-traded funds focused on specific sectors in emerging markets. (See related story here.)

EGA is expected to launch soon a third ETF that will act as a composite of the 10 underlying sectors in the Dow Jones emerging markets indexing series it’s using for current and upcoming funds.

The company says that nine more are in the works focusing on emerging markets sectors. Those will join the May launches of the EGS Emerging Markets Energy Fund (NYSE Arca: EEO) and the  EGS Emerging Markets Metals & Mining Fund (NYSE Arca: EMT).

IndexUniverse.com’s Murray Coleman caught up with Holderith and Kang late Thursday to discuss the future of sector investing in developing markets.

IU: What is available for U.S.-based investors in terms of foreign sector ETFs now?

Holderith: The family of Select Sector SPDRs is the dominant ETF line providing sector-based exposures.  They’ve got a long history. But those ETFs only focus on U.S. companies. For pure international exposure to foreign sectors, we’ve only seen two-  to three- years worth of actual performance history. And that’s through the iShares’ global sector family of funds as well as those of State Street Global Advisors. The SSgA  family is purely international sector ETFs.

IU: Then your firm’s line-up of international sector ETFs will compete most directly against those of SSgA?

Kang: No, since the SSgA ETFs are focused predominately on developed markets. For example, take the SPDR S&P International Financial Sector (NYSE: IPF). The top weighted countries are (in order): Japan, Canada, Australia, the U.K., Spain and Switzerland. The SSgA international sector ETFs do allow for some emerging markets exposure. But as cap-weighted indexes, they’re heavily skewed to developed countries.

IU: Why is your company going with pure emerging markets exposure rather than a mix of developed and emerging markets?

Holderith: There’s more than enough coverage of developed international markets now in the ETF marketplace. In terms of emerging markets, we’ve seen broad, regional and country specific funds. But we’re first to market with sector-specific ETFs for developing countries. The EMT and EEO ETFs are the first of a series we’re preparing to launch.

IU: What others are planned?

Holderith: We’ve got in the pipeline 10 ETFs still left to bring-to-market. Those will all use Dow Jones indexes, similar to those used by EMT and EEO. Dow Jones uses a classification system for sectors called the ICB (or industry classification benchmark) system. The other sector-specific ETFs in various stages of planning we’re working on launching cover: basic materials; consumer goods; consumer services; financials; health care; industrials; technology; telecom and utilities.

IU: You’ve also got a broader ETF that has received regulatory approval, don’t you?

Holderith: Yes, we’ve got a composite ETF that’s due to launch within the next few weeks.  That’s an ETF tracking a Dow Jones index that takes the top 10 names from each of the 10 major emerging markets sectors. (It won’t include metals and mining, which is a subsector of basic materials.)  So that will leave 100 names in the underlying composite index. And as in all of our ETFs, we have a rule that caps individual weightings at no more than 10%.

IU: In the composite index for such an emerging markets fund, what would the sector weightings look like then?

Holderith: Oil and gas along with financials are the dominant sectors in the composite index.

IU: What type of performance have you seen through back-tested data for emerging markets sector indexes compared to developed markets sector indexes?

Kang: We have data going back many years for the underlying benchmarks. The data for emerging markets, however, isn’t as robust as that for developed markets. So we really focus on data going back to December 2005 when comparing the Dow Jones composite benchmark we’re using for our emerging markets sector funds.

IU: What do those comparisons show?

Kang: Going back to 2005, returns were generally spectacular up through 2007 for emerging markets vs. developed markets. In the latter half of 2008, we saw greater volatility and bigger losses in emerging markets. As with any more volatile asset class, emerging markets offers the potential for greater long-term gains as a result. Clearly, some sectors performed better in relative terms during the periods when markets were going up versus others.  The same is true in the bear market of 2008.  That is the essence of the popularity of sector funds -- their selection during different stages of the market cycle.

IU: How correlated are emerging markets sectors to developed markets sectors?

Kang: That’s a tricky question. It depends on your timeframe. In statistical terms, there’s just not a lot of data. But you can draw some general conclusions. There are times, like in the bull market from 2005-2007, when many sectors in emerging markets and developed markets were highly correlated. Commodity stocks were highly correlated during the commodities boon regardless of location. On the other hand during the credit crisis, financials haven’t been as highly correlated because banks in the U.K, for example, have been exposed to more toxic assets than banks in places like China, Brazil and India.

IU: What do you see as the biggest benefits of breaking emerging markets into sectors?

Kang: A lot of investors managing their emerging markets exposures are doing so by allocating between countries. The question we asked at the very beginning of creating our ETFs is how much overlap there is between sectors and geography.

Let’s say you’re an American investor with heavy exposure to the S&P 500 index. Maybe you’ve tilted your  portfolio a little to commodities through funds such as the SPDR Gold Shares (NYSE: GLD) and the iPath Dow Jones-AIG Commodity Index ETN (NYSE: DJP). If you’ve got that portfolio, you look more like a Canadian or an Aussie – both of those countries are heavily influenced by movements in natural resources prices.

IU: In other words, broader-based ETFs don’t add a lot in those situations?

Kang: The inclusion of broad emerging market ETFs as well as many of the country specific ETFs to this kind of portfolio would not provide diversification as correlations would be surprisingly high.  For true diversification, the inclusion of certain sectors would likely provide more optimal risk-return characteristics to the overall portfolio.

Furthermore, many investors who invest in emerging markets country ETFs do so based on a sector-type of rationale. For example, let’s say someone wants to invest in Russia. The question I would ask is: Do you want to invest in that country to be more richly compensated with some sort of political risk associated with that country? Or, are you investing in Russia to make an oil and gas bet? If that’s the case, do you want to put all your eggs in one basket – Russia. Or, would you prefer to invest in a basket focused on oil and gas but with companies from Russia, India, China, Brazil and several others?

IU: Those are the top countries in EEO, aren’t they?

Kang: Yes. Those four countries comprise roughly two-thirds of the fund. And with EMT, the top countries are: South Africa, Brazil, China and Russia. Those take up more than three-quarters of the fund.

Bob Holderith is chief executive of Emerging Global Advisors. Richard Kang is chief investment officer for the New York-based company, which recently launched the first exchange-traded funds focused on specific sectors in emerging markets. (See related story here.)

EGA is expected to launch soon a third ETF that will act as a composite of the 10 underlying sectors in the Dow Jones emerging markets indexing series it’s using for current and upcoming funds.

The company says that nine more are in the works focusing on emerging markets sectors. Those will join the May launches of the EGS Emerging Markets Energy Fund (NYSE Arca: EEO) and the EGS Emerging Markets Metals & Mining Fund (NYSE Arca: EMT).

IndexUniverse.com’s Murray Coleman caught up with Holderith and Kang late Thursday to discuss the future of sector investing in developing markets.

IU: What is available for U.S.-based investors in terms of foreign sector ETFs now?

Holderith: The family of Select Sector SPDRs is the dominant ETF line providing sector-based exposures. They’ve got a long history. But those ETFs only focus on U.S. companies. For pure international exposure to foreign sectors, we’ve only seen two- to three- years worth of actual performance history. And that’s through the iShares’ global sector family of funds as well as those of State Street Global Advisors. The SSgA family is purely international sector ETFs.

IU: Then your firm’s line-up of international sector ETFs will compete most directly against those of SSgA?

Kang: No, since the SSgA ETFs are focused predominately on developed markets. For example, take the SPDR S&P International Financial Sector (NYSE: IPF). The top weighted countries are (in order): Japan, Canada, Australia, the U.K., Spain and Switzerland. The SSgA international sector ETFs do allow for some emerging markets exposure. But as cap-weighted indexes, they’re heavily skewed to developed countries.

IU: Why is your company going with pure emerging markets exposure rather than a mix of developed and emerging markets?

Holderith: There’s more than enough coverage of developed international markets now in the ETF marketplace. In terms of emerging markets, we’ve seen broad, regional and country specific funds. But we’re first to market with sector-specific ETFs for developing countries. The EMT and EEO ETFs are the first of a series we’re preparing to launch.

IU: What others are planned?

Holderith: We’ve got in the pipeline 10 ETFs still left to bring-to-market. Those will all use Dow Jones indexes, similar to those used by EMT and EEO. Dow Jones uses a classification system for sectors called the ICB (or industry classification benchmark) system. The other sector-specific ETFs in various stages of planning we’re working on launching cover: basic materials; consumer goods; consumer services; financials; health care; industrials; technology; telecom and utilities.

IU: You’ve also got a broader ETF that has received regulatory approval, don’t you?

Holderith: Yes, we’ve got a composite ETF that’s due to launch within the next few weeks. That’s an ETF tracking a Dow Jones index that takes the top 10 names from each of the 10 major emerging markets sectors. (It won’t include metals and mining, which is a subsector of basic materials.) So that will leave 100 names in the underlying composite index. And as in all of our ETFs, we have a rule that caps individual weightings at no more than 10%.

IU: In the composite index for such an emerging markets fund, what would the sector weightings look like then?

Holderith: Oil and gas along with financials are the dominant sectors in the composite index.

IU: What type of performance have you seen through back-tested data for emerging markets sector indexes compared to developed markets sector indexes?

Kang: We have data going back many years for the underlying benchmarks. The data for emerging markets, however, isn’t as robust as that for developed markets. So we really focus on data going back to December 2005 when comparing the Dow Jones composite benchmark we’re using for our emerging markets sector funds.

IU: What do those comparisons show?

Kang: Going back to 2005, returns were generally spectacular up through 2007 for emerging markets vs. developed markets. In the latter half of 2008, we saw greater volatility and bigger losses in emerging markets. As with any more volatile asset class, emerging markets offers the potential for greater long-term gains as a result. Clearly, some sectors performed better in relative terms during the periods when markets were going up versus others. The same is true in the bear market of 2008. That is the essence of the popularity of sector funds -- their selection during different stages of the market cycle.

IU: How correlated are emerging markets sectors to developed markets sectors?

Kang: That’s a tricky question. It depends on your timeframe. In statistical terms, there’s just not a lot of data. But you can draw some general conclusions. There are times, like in the bull market from 2005-2007, when many sectors in emerging markets and developed markets were highly correlated. Commodity stocks were highly correlated during the commodities boon regardless of location. On the other hand during the credit crisis, financials haven’t been as highly correlated because banks in the U.K, for example, have been exposed to more toxic assets than banks in places like China, Brazil and India.

IU: What do you see as the biggest benefits of breaking emerging markets into sectors?

Kang: A lot of investors managing their emerging markets exposures are doing so by allocating between countries. The question we asked at the very beginning of creating our ETFs is how much overlap there is between sectors and geography.

Let’s say you’re an American investor with heavy exposure to the S&P 500 index. Maybe you’ve tilted your portfolio a little to commodities through funds such as the SPDR Gold Shares (NYSE: GLD) and the iPath Dow Jones-AIG Commodity Index ETN (NYSE: DJP). If you’ve got that portfolio, you look more like a Canadian or an Aussie – both of those countries are heavily influenced by movements in natural resources prices.

IU: In other words, broader-based ETFs don’t add a lot in those situations?

Kang: The inclusion of broad emerging market ETFs as well as many of the country specific ETFs to this kind of portfolio would not provide diversification as correlations would be surprisingly high. For true diversification, the inclusion of certain sectors would likely provide more optimal risk-return characteristics to the overall portfolio.

Furthermore, many investors who invest in emerging markets country ETFs do so based on a sector-type of rationale. For example, let’s say someone wants to invest in Russia. The question I would ask is: Do you want to invest in that country to be more richly compensated with some sort of political risk associated with that country? Or, are you investing in Russia to make an oil and gas bet? If that’s the case, do you want to put all your eggs in one basket – Russia. Or, would you prefer to invest in a basket focused on oil and gas but with companies from Russia, India, China, Brazil and several others?

IU: Those are the top countries in EEO, aren’t they?

Kang: Yes. Those four countries comprise roughly two-thirds of the fund. And with EMT, the top countries are: South Africa, Brazil, China and Russia. Those take up more than three-quarters of the fund.

Right now, in the wake of MSCI’s reclassification of Israel as a developed market, I’m working on a rundown of the country classifications of four major index providers: MSCI, Dow Jones, FTSE and Standard & Poor’s.

The evolution of emerging markets (and sometimes devolution of developed markets—see Greece, which could lose developed-market status in the FTSE indexes) is just particularly fascinating to me. Take some of the frontier/emerging markets that the index providers cover at the very bottom rungs of the investability ladder: Latvia? Slovakia? Trinidad & Tobago? Mauritius?

Frankly, I’m dying to know what the investment stories are behind these tiny, tiny markets. And while I believe frontier markets (like, say, Vietnam) offer some awesome investment opportunities, is anyone really itching to sink some funds into an obscure eastern European country that probably has a smaller population than the number of visitors to my local mall on the day after Christmas?

I realize there are different rules and methodologies that each of the index providers use, but it all seems rather mysterious. For example, Dow Jones—which generally uses the International Monetary Fund’s designations—classifies Slovenia as a developed market, while MSCI has it labeled as a frontier market. That’s quite a disparity.

Lately, the majority of the focus has been on Israel and South Korea, though, and whether they will transition to developed-market status within the various classification systems. MSCI, of course, just promoted Israel to developed status last week, while keeping Korea in the emerging category. Given that the majority of internationally invested funds are benchmarked to MSCI indexes (at least in the U.S.), this issue has been followed fairly closely by investors. At the end of March, Israel was the ninth-largest country in the MSCI Emerging Markets Index, with a 4.0% weighting, and South Korea was the fourth-largest, with a 12.4% weighting.

Given the amount of money benchmarked to that index and the even greater amount benchmarked to the MSCI EAFE Index, which Israel now joins, that’s an awful lot of funds shifting around. South Korea is up for reconsideration in 2010 (as is Taiwan, another country straddling the emerging/developed divide).

But MSCI seems to be on the tail end of the trend: Dow Jones, S&P and FTSE all classify South Korea as a developed market, while only Dow Jones and FTSE put Israel into the developed bucket. S&P still has Israel as emerging. Of course, FTSE, S&P and Dow Jones have a lot fewer funds tracking or measured against their global indexes.

They can shift their country classifications with relative ease, as they deem appropriate, without a lot of reverberation. But if MSCI decides to promote a country to developed status, many, many billions of dollars are going to be moving around, with all sorts of economic consequences.

And not all of them will be positive: In Israel, there is concern that the country moving from relatively big-dog status in the emerging markets index to a minor position in the developed markets index will actually result in outflows from the local stock market.

(Read an article on the latest MSCI moves here. Also of interest might be a Bloomberg article on the subject here, and another article from an Israeli publication about a Deutsche Bank study on the potential negative impacts of the switch.)

Teva Pharmaceutical, Israel’s largest company, saw its price spike in June shortly before the official MSCI announcement, but there’s no telling what the longer-term effects will be. It will be interesting to see what happens with that, and even more interesting to compare the outcomes with what happens when South Korea—and its big stock, Samsung Electronics—is finally promoted to developed status.

Yeah, that was definitely the unrepentant nerd talking …

Before we begin, let's explain the contrarian stance that makes Schaeffer's so unique. When searching for a bullish pick, we like to see heavy skepticism toward an outperforming stock, as this leaves ample room for upgrades or other positive catalysts to fuel the stock higher. When searching for a bearish pick, on the other hand, contrarians are looking for significant bullish sentiment toward an underperforming stock, as we believe an excess of optimism is a sign that everyone has already bought into the stock and sideline money is virtually tapped out.

However, keep in mind that some optimism and pessimism is genuinely warranted and isn't always a contrarian indicator - like an outperforming stock with many "buy" ratings or an underperforming stock with a plethora of "sell" ratings.

Brokerage firm RBC Capital on Thursday opined that financial stocks are at the beginning of a new, multi-year bull market, Dow Jones reported. As a result, analysts upped their rating on the banking sector to "overweight" from "sector perform," and predicted a rise in banks' revenue and earnings due to wider net interest margins and reduced credit costs. Furthermore, RBC singled out KEY, upgrading the stock to "top pick" from "sector perform."

In light of the bullish comments, call volume catapulted higher on KEY. According to the Zacks filter, the equity saw more than 24,000 calls change hands Thursday, tripling its average daily volume of fewer than 8,000 contracts. The stock's Jun 5 call was most active, with 9,350 contracts crossing the tape.

However, the option's popularity is nothing new; during the past couple of weeks, Jun 5 call open interest has swelled by more than 21,000 contracts. In fact, the at-the-money 5 strike is now home to peak call open interest in the front-month series, with more than 25,100 contracts in residence.

In Friday's trading, it appeared that the optimists in the options arena set the bar even higher for KEY. The security's Jun 6 call was most active, with more than 3,500 contracts changing hands. The near-the-money 6 strike is currently home to almost 8,000 call contracts in the June series of options, and harbors 5,100 open call positions in the July series - the highest in the back-month series.

The escalating optimism among near-term traders is further evident in KEY's Schaeffer's put/call open interest ratio, which measures options slated to expire within 3 months. The stock's SOIR currently rests at 0.98, in the 30th annual percentile, implying that short-term speculators have been more bullishly biased toward the equity less than a third of the time during the past year.

So, are the high hopes among options players warranted? Let's examine the stock from a technical perspective.

While the broader S&P 500 Index (SPX) has rallied almost 4% since the start of 2009, shares of KEY have surrendered about 35% year-to-date. Further demonstrating the stock's status as a market weakling of late, KEY has underperformed the broader SPX by 22% during the past 40 trading sessions.

Nevertheless, the equity has staged a decent rebound since the start of June, advancing about 23% to hang out in the $5.40 neighborhood. What's more, KEY is poised to close its second consecutive session atop double-barreled resistance at its 10-day and 20-day moving averages - a feat not accomplished since mid-April.

From a longer-term perspective, though, the charts aren't as encouraging. Since skimming the $40 level in February 2007, the stock has backpedaled more than 86%. And though some may argue that shares of KEY look cheap at the moment, any rally attempts could face a roadblock in the form of the stock's descending 32-week moving average, which has smacked the security lower on several occasions during the past couple of years.

In conclusion, while the confidence among call speculators continues to grow, shares of KEY may still have some technical hurdles to overcome before proving that their recent rebound has legs. If the stock fails to conquer the potential challenges on the charts, the escalating optimism could subside. Should the bulls in the options arena remove their rose-colored glasses en masse, an unwinding of optimism could act as an additional catalyst to the downside.

Zacks Investment Research

Screen of the Week written by Kevin Matras of Zacks Investment Research:

Today I want to talk about moving averages.

I wrote about this earlier in the year, but thought a quick review would be in order since so many people are talking about the 200-day moving average on TV and in the newspapers, and whether the stock market can get thru it or not.

First off, moving averages would fall under the heading of 'technical analysis'. But you don't have to be a technician to use them. They're pretty plain and simple and very straight forward.

Even though the market is making a nice comeback, it has been in a brutal downtrend over the last year and a half.

But we're at an inflection point where the market seems to be getting ready to breakout even higher - or hit a wall and turn around.

And that's where all of this 200-day moving average talk comes into play.

Long-Term and Short-Term Moving Averages

Short-term moving averages help gauge the short term direction of the market while longer-term moving averages take a bigger picture view.

The 200-day moving average would be a longer-term moving average.

In general, if a stock breaks the 200-day moving average on its way down, that's generally thought to be bearish, and the longer-term trend could be turning lower.

Tons of stocks did this in 2008.

The 200-day moving average can also act as support. If a stock comes down, but stops at the major moving average and then starts moving higher from there, it can act as a firm underpinning of support for the stock. Kind of like a moving trendline.

And just like breaking the 200-day moving average on the way down can often times signal a downtrend, an upside breakout thru the 200-day moving average can often times signal the beginning of a new uptrend for a stock.

The 50-day moving average can be quite useful as well. It's more of an intermediate snapshot of the price trend and is more sensitive than the longer-term 200 day.

A rising moving average with the price trading above it is bullish while a descending moving average with the price trading below it is bearish.

And even shorter term signals can be seen with the 10- and 20-day moving averages.

Moving average crossovers can also be valuable. When the quicker moving average (10-day for example) is above the slower moving average (20-day), this is thought to be bullish. Likewise, when the shorter-term is trading below the longer-term moving average, this is thought to be bearish.

Currently, the Nasdaq is trading above the 200-day moving average, the S&P 500 just poked thru there the other day and the Dow Jones just touched the underside of it on Monday. (See below.)

What does this mean?

It means that the market will be looking at the indexes very closely to see if the 200-day moving average acts as resistance or support.

If the markets can stay above the 200-day; chartists, technicians, skeptics and the like will look at this as the confirmation they need to believe the market is shedding its long-term downtrend and potentially beginning a new leg up.

But whether the market breaks thru the 200-day moving average or not, there are plenty of stocks already trading above it and many more breaking thru (up or down) every day.

And finding these kinds of stocks is easy to do with a stock screener.

Of course, moving averages alone don't tell the whole story. But a company with solid fundamentals, while also trading above these momentum indicators, can help you find stocks in confirmed uptrends.

The screen that I'm running today looks for stocks trading above their short-term moving averages (10- and 20-day), intermediate term moving average (50-day) and long-term moving average (200-day). They also have to have a Zacks #1 Rank or Zacks #2 Rank stocks (which is a Strong Buy or a Buy, respectively) and have positive forward looking growth rates.

Here are 5 stocks from this week's screen:

EQIX Equinix, Inc.
EVVV ev3, Inc.
MRTN Marten Transport, Inc.
PCLN priceline.com, Inc.
URS URS Corp.

Get the rest of the stocks on this list and start finding stocks above (or below) their moving averages on your own. It's easy to do.

Click here to sign up for a free trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here http://at.zacks.com/?id =112

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros http://at.zacks.com/?id =113

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Visit http://www.zacks.c om/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: www.Zacks.com

Screen of the Week written by Kevin Matras of Zacks Investment Research:

Today I want to talk about moving averages. I wrote about this earlier in the year, but thought a quick review would be in order since so many people are talking about the 200-day moving average on TV and in the newspapers.

First off, moving averages would fall under the heading of 'technical analysis'. But you don't have to be a technician to use them. They're pretty plain and simple and very straight forward.

Even though the market is making a nice comeback, it has been in a brutal downtrend over the last year and a half. But we're at an inflection point where the market seems to be getting ready to breakout even higher - or hit a wall and turn around.

That's where all of this 200-day moving average talk comes into play.

Long-Term and Short-Term Moving Averages

Short-term moving averages help gauge the short term direction of the market while longer-term moving averages take a bigger picture view.

The 200-day moving average would be a longer-term moving average. In general, if a stock breaks the 200-day moving average on its way down, that's generally thought to be bearish, and the longer-term trend could be turning lower. Tons of stocks did this in 2008.

The 200-day moving average can also act as support. If a stock comes down, but stops at the major moving average and then starts moving higher from there, it can act as a firm underpinning of support for the stock. Kind of like a moving trendline.

And just like breaking the 200-day moving average on the way down can often times signal a downtrend, an upside breakout thru the 200-day moving average can often times signal the beginning of a new uptrend for a stock.

The 50-day moving average can be quite useful as well. It's more of an intermediate snapshot of the price trend and is more sensitive than the longer-term 200 day. A rising moving average with the price trading above it is bullish while a descending moving average with the price trading below it is bearish.

And even shorter term signals can be seen with the 10- and 20-day moving averages.

Moving average crossovers can also be valuable. When the quicker moving average (10-day for example) is above the slower moving average (20-day), this is thought to be bullish. Likewise, when the shorter-term is trading below the longer-term moving average, this is thought to be bearish.

Currently, the Nasdaq is trading above the 200-day moving average, the S&P 500 just poked thru there the other day and the Dow Jones just touched the underside of it on Monday.

What does this mean? It means that the market will be looking at the indexes very closely to see if the 200-day moving average acts as resistance or support. If the markets can stay above the 200-day; chartists, technicians, skeptics and the like will look at this as the confirmation they need to believe the market is shedding its long-term downtrend and potentially beginning a new leg up.

But whether the market breaks thru the 200-day moving average or not, there are plenty of stocks already trading above it and many more breaking thru (up or down) every day. And finding these kinds of stocks is easy to do with a stock screener. Of course, moving averages alone don't tell the whole story. But a company with solid fundamentals, while also trading above these momentum indicators, can help you find stocks in confirmed uptrends.

The screen that I'm running today looks for stocks trading above their short-term moving averages (10- and 20-day), intermediate term moving average (50-day) and long-term moving average (200-day). They also need to be Zacks #1 Rank or Zacks #2 Rank stocks (which is a Strong Buy or a Buy, respectively) and have positive forward looking growth rates.

Here are 5 stocks from this week's screen:

Equinix, Inc. (EQIX)
ev3, Inc. (EVVV)
Marten Transport, Inc. (MRTN)
priceline.com, Inc. (PCLN)
URS Corp. (URS)

Get the rest of the stocks on this list and start finding stocks above (or below) their moving averages on your own. It's easy to do. Click here to sign up for a free trial to the Research Wizard today: http://at.zacks.com/?id=111.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here http://at.zacks.com/?id=112.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros http://at.zacks.com/?id=113.

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com
Visit: www.Zacks.com

General Motors' shares were delisted by the New York Stock Exchange and were dropped from the Dow Jones Industrial Average. Dow Jones said General Motors and Citigroup (NYSE:C) will be officially dropped from the average on June 8 and will be replaced by Cisco Systems (NASDAQ:CSCO) and Travelers Companies (NYSE:TRV). Cisco Systems jumped 5.4% to $19.50 and Travelers Cos., the biggest U.S. property insurer by market value, added 3.1% to $41.91.  Dow Jones said Citigroup (NYSE:C) is being dropped from the average amid "a substantial restructuring which will see the government with a large and ongoing stake."

The Commerce Department said US construction spending rose unexpectedly in April, with total spending rising 0.8%, to a seasonally adjusted annual rate of $968.67 billion compared to March.  Wall Street had expected a 0.9% decline.  Prudential Financial (NYSE:PRU), meanwhile, refused to access government's program for additional funds, and announced plans to raise $1.25 billion through a common stock offering. SunTrust (NYSE:STI) which needs $2.2 billion in additional capital outlined by last month's stress tests, announced plans to raise $1.4 billion in a common stock offering.   

Government bonds fell again Monday, driving yields back near last week's highs with the yield on the benchmark 10-year note rising to 3.68% from 3.46% late Friday.  The Reuters/Jefferies CRB Index of 19 raw materials increased for a sixth day, adding 3.1%.  Exxon Mobil Corp. (NYSE:XOM) added 3.5% to $71.76 and Chevron Corp. (NYSE:CVX) jumped 3.8% to $69.21 as crude prices went beyond $68 per barrel.

Treasury Secretary Timothy Geithner arrived in China to reassure the country that its holdings of U.S. debt are safe even as government borrowing rises.

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Monday's Analyst Blog:

GM & Citi Replaced on the Dow

I think Dow Jones missed a good opportunity to position the average for the changing global economy.

Cisco Systems (CSCO) has long been considered to be a prime candidate for the Dow. Given its size and influence, it's difficult to argue against adding the telecom equipment company. However, the average already has Hewlett-Packard (HPQ), International Business Machines (IBM) and Intel (INTC) -- 3 bellwethers of the tech sector.

Therefore, I think a better choice would have been Google (GOOG). Adding GOOG would have given the Dow exposure to the ever-growing ecommerce sector AND the wireless communications sector. Phones using Google's Android operating system are slated to appear at multiple carriers this fall.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4580.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

First off, moving averages would fall under the heading of 'technical analysis'. But you don't have to be a technician to use them. They're pretty plain and simple and very straight forward.

Even though the market is making a nice comeback, it has been in a brutal downtrend over the last year and a half.

But we're at an inflection point where the market seems to be getting ready to breakout even higher - or hit a wall and turn around.

And that's where all of this 200-day moving average talk comes into play.

Long-Term and Short-Term Moving Averages

Short-term moving averages help gauge the short term direction of the market while longer-term moving averages take a bigger picture view.

The 200-day moving average would be a longer-term moving average.

In general, if a stock breaks the 200-day moving average on its way down, that's generally thought to be bearish, and the longer-term trend could be turning lower.

Tons of stocks did this in 2008.

The 200-day moving average can also act as support. If a stock comes down, but stops at the major moving average and then starts moving higher from there, it can act as a firm underpinning of support for the stock. Kind of like a moving trendline.

And just like breaking the 200-day moving average on the way down can often times signal a downtrend, an upside breakout thru the 200-day moving average can often times signal the beginning of a new uptrend for a stock.

The 50-day moving average can be quite useful as well. It's more of an intermediate snapshot of the price trend and is more sensitive than the longer-term 200 day.

A rising moving average with the price trading above it is bullish while a descending moving average with the price trading below it is bearish.

And even shorter term signals can be seen with the 10- and 20-day moving averages.

Moving average crossovers can also be valuable. When the quicker moving average (10-day for example) is above the slower moving average (20-day), this is thought to be bullish. Likewise, when the shorter-term is trading below the longer-term moving average, this is thought to be bearish.

Currently, the Nasdaq is trading above the 200-day moving average, the S&P 500 just poked thru there the other day and the Dow Jones just touched the underside of it on Monday. (See below.)

What does this mean?

It means that the market will be looking at the indexes very closely to see if the 200-day moving average acts as resistance or support.

If the markets can stay above the 200-day; chartists, technicians, skeptics and the like will look at this as the confirmation they need to believe the market is shedding its long-term downtrend and potentially beginning a new leg up.

But whether the market breaks thru the 200-day moving average or not, there are plenty of stocks already trading above it and many more breaking thru (up or down) every day.

And finding these kinds of stocks is easy to do with a stock screener.

Of course, moving averages alone don't tell the whole story. But a company with solid fundamentals, while also trading above these momentum indicators, can help you find stocks in confirmed uptrends.

The screen that I'm running today looks for stocks trading above their short-term moving averages (10- and 20-day), intermediate term moving average (50-day) and long-term moving average (200-day). They also have to have a Zacks #1 Rank or Zacks #2 Rank stocks (which is a Strong Buy or a Buy, respectively) and have positive forward looking growth rates.

Here are 5 stocks from this week's screen:

EQIX Equinix, Inc.
EVVV ev3, Inc.
MRTN Marten Transport, Inc.
PCLN priceline.com, Inc.
URS URS Corp.

Get the rest of the stocks on this list and start finding stocks above (or below) their moving averages on your own. It's easy to do.

Click here to sign up for a free trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Zacks Investment Research

Along with this much anticipated move, which is a natural corollary of the beleaguered firm's entry into bankruptcy court, the benchmark stock index also removed Citigroup Inc. (C) from its lineup to make way for the second-largest U.S. commercial insurer Travelers Co. (TRV). Both GM and Citigroup will be formally taken out from the average at the opening of trade on Jun 8.

While swapping companies on the index usually takes years, the worst financial crisis since the Great Depression has claimed many of its components as victims. The last change came when Kraft Foods Inc. (KFT) replaced the ailing American International Group Inc. (AIG) in September.

Dow Jones Editor in Chief Robert Thomson, who plays a key role in deciding the composition of the index, said, "We were reluctant to remove Citigroup at the height of the financial frenzy, but it is clear that the bank is in the midst of a substantial restructuring which will see the government with a large and ongoing stake."

Citi was added to the index in March 1997 as Travelers Group Inc. The country's biggest financial firm by assets was formed by a merger of Travelers and Citicorp. In 2002, it spun off the Hartford, Connecticut-based Travelers Property Casualty Corp. through an initial public offering. The irony is that the same firm is now replacing Citigroup on the DJIA.

With the addition of Cisco to the index, the technology weighting of the DJIA now goes up to about 17%. Shares of Cisco rose 6% to $19.61 at noon on the NASDAQ, while Travelers gained nearly 4% to $42.20 on the New York Stock Exchange at about the same time. Responding to upbeat economic reports, the DJIA is currently up 2.67% or 227.24 points.

General Motor's bankruptcy is all but a sure thing, and with it, the company's 81-year run as a component of the Dow Jones Industrial Average will come to a merciful end.

According to Reuters, sources say that GM (NYSE: GM) will likely file for bankruptcy some time after midnight tonight and before June 1. The company has apparently failed to convince bondholders to exchange their debt for an equity stake in a restructured company, ensuring the bankruptcy filing.

(In an interesting quirk, the AP reports that many bondholders hold credit default swaps on their GM debt. If the company files for bankruptcy, these CDS swaps will be triggered. The Depository Trust & Clearing Corp. says these CDS swaps will pay out $2.33 billion if the company enters bankrupt. Talk about perverse incentives.)

As always, I can't help but to speculate about which company will be chosen to replace GM when it exits the Dow.

I wrote a similar blog back in September 2008, when American International Group (NYSE: AIG) was removed from the benchmark.  At the time, my thoughts focused on two companies:  the banking giant Wells Fargo (NYSE: WFC) and the biotech megalith Amgen (Nasdaq: AMGN). 

Both healthcare and finance were under-represented in the DJIA vis-à-vis the S&P 500 and I figured the index committee would look towards those sectors for replacement to round out the index.

As we all know, I was wrong.  Dow picked Kraft Foods (NYSE: KFT), adding the first food component to the index.  It said it did not replace AIG with another financial company due to "extremely unsettled conditions" in the financial market.

Fast-forward to today: Have things settled down enough now to make adding a financial company an OK bet?

I'm of mixed minds.  Things have certainly settled down since September 2008, when it was not clear there would be a financial sector going forward, and companies faced a day-to-day battle to survive.  But it's not as if the financial industry is completely out of the woods.

So what do I think will happen?  If I were a betting man, I'd say that the good folks at Dow Jones do a bit of a clean-up of the index, replacing not just GM but Citigroup (NYSE: C), too. If that happens, the smart money says that Wells Fargo will enter the index as a new financial representative, with Goldman Sachs (NYSE: GS) a distant second bet.

Beyond that, it's an open race. I still think Amgen would be an interesting choice, but Nike (NYSE: NKE), Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG) and a few others probably make the short list as well.

A Note For Jim

Before you jump on your holier-than-thou indexing horse when writing about my reflation portfolio, it might pay to actually read my blog first.

You write of my list of ETFs designed for a reflationary environment: "Laying out a portfolio that adds up to 100% and filling it with mostly alternatives that should probably add up to 5 or 10% maximum of someone's portfolio seems like dangerous advice."

Good point. 

That's why I wrote: "I don't think this should be 100% (or even 50% or 25%) of someone's portfolio. I don't own all these funds myself; my portfolio, as most people know, is boring, long-term focused and ultra-low-cost."

It's funny how I make all the most important points a day or two before you do.

The growth in emerging markets can now be played by country-specific exchange-traded funds as well as broad-based stock portfolios.

But on Thursday, another option became available to investors. The first family of ETFs offering exposure to sectors within emerging markets was launched by New York-based Emerging Global Advisors.

• EGS Emerging Markets Energy Fund (NYSE Arca: EEO). It tracks an index of the 30 largest emerging markets companies in the oil and gas industry across 13 countries.
• EGS Emerging Markets Metals & Mining Fund (NYSE Arca: EMT). It includes 30 of the biggest emerging market companies in the metals and mining sectors across nine countries.

As first-movers in the market, the two new emerging markets sector ETFs are setting the cost bar for such a niche at an expense ratio of 0.85% apiece. But Holderith described the new sector ETFs as trading vehicles that would particularly open new avenues for institutional investors.

Despite the relatively high price tag, that might be enticing for hedge fund managers and other investment groups trying to shift large amounts across various emerging markets.

Richard Kang, who serves as the firm's director of research, noted that developing markets can run into rather severe liquidity problems at times. He pointed to the fact that stock exchanges in several emerging countries have been forced to completely shut down. That was the case in Russia during much of the worst of the global financial crisis, among others.

By taking a sector perspective across several different markets, he believes that traders will be able to cushion their exposure to such liquidity problems and diversify their portfolios in different ways. "The Emerging Global Shares ETFs are designed to give investors the ability to execute active investment management strategies in markets where the liquidity to trade is not always available," said Kang in a statement.

STOCK TRADING AHEAD OF MEMORIAL DAY: THE NUMBERS IN THE CROSSHAIRS

1. AFTER A BIG WALL STREET RALLY WE ASK: WHAT NOW?
2. SUN TZU AND THE ART OF STOCK TRADING PATIENCE
3. THOMAS BULKOWSKI AND THE FAILURE OF POPULAR STOCK TRADING PATTERNS

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579.

Here are highlights from Monday's Analyst Blog:

Nanosphere Q1 Revs Disappoint

Nanosphere, Inc. (NSPH) reported financial results for the period ending March 31, 2009 following the market close on May 7, 2009. Revenue came in at $255,225, all of which was from product sales, which consisted largely of cartridge sales. There was no contribution from government grants and contracts revenue during the quarter.

Product sales fell 16% from the $303,404 posted in the first quarter 2008. Sales were significantly below our forecast of $520,000 ($510,000 product sales plus $10,000 in government grants and contracts revenue) due to delays in getting the cystic fibrosis (CF) and first-generation infectious disease (RVP) assays to market. Management noted that cartridge sales remained robust with customer utilization rates increasing in the quarter, both on a year-over-year and sequential basis.

CBS Corp. Upgraded to Buy

CBS Corporation (CBS) lifted a hovering dark cloud by announcing Friday that it is repurchasing $1.2 billion in senior notes due in October 2010, and funding them with longer-term notes.

The tender offer for the 7.7% senior notes expires May 15.

NewsCorp to Try Micro-Payments

In a move designed to reduce its reliance on advertising revenues, Editor-in-chief of Dow Jones and managing editor of The Wall Street Journal (WSJ, a subsidiary of News Corporation [NWS]), Robert Thomson yesterday unveiled plans to introduce a "sophisticated micro-payments service" for access to individual online articles later this year. The announcement is consistent a number of key personnel changes, which point to a greater emphasis on the company's digital media assets going forward.

News Corp. recently reported lower-than-expected net income of $2.7B, effectively flat y/y, compared with $2.7B in 3Q08. Total operating income decreased 48% y/y, primarily due to a 97% y/y and 99% y/y decline in Newspaper and Film division contributions respectively.

Bullish on Corrections Corp.

Shares of Buy-rated Corrections Corporation of America (CXW) were up more than 25% last week.

Late last week, the company reported quarterly earnings that exceeded our expectation, and raised its full-year earnings guidance.

We continue to believe that the private-prison industry in the United States holds significant growth potential, and as the largest company in the industry, we consider CXW to be well-positioned to capitalize on growth going forward.

John Bean Q1 Numbers Way Off

Revenues of $169.0 million for John Bean Technology Corp. (JBT) were down 35.0%. Gross Income declined by 24.2% to $46.9 million; however, the Gross Margin did climb from 23.8% to 27.8%, which is a positive.

Although S,G&A dropped 11.2% to $34.8 million, it wasn't enough to keep the expense ratio from rising from 15.1% of Sales to 20.6%. Similarly, R,D,T&E dipped 27.3% to $4.0 million, but rose as a percent of Sales from 2.1% to 2.4%. Other Income/Expense dropped 85.7% to $300 thousand, while Interest went from a positive $100 thousand of Income to a negative $2.2 million of Expense.

Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=2649.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4580.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com

An index that tracks hedge fund strategies with distressed securities has temporarily suspended publication, Dow Jones announced early Monday. 

The Dow Jones Hedge Fund Distressed Securities Strategy Benchmark will remain closed indefinitely, the index provider added in a statement. 

It said the "decision to halt publication of the benchmark is a result of market conditions in the distressed securities space, and was made jointly by Dow Jones Hedge Fund Indexes and the investment manager of the managed account platform that supports the Dow Jones Hedge Fund Strategy benchmarks."

The move follows similar action taken by Dow Jones recently. On Jan. 2, it halted publication of the Dow Jones Hedge Fund Convertible Arbitrage Strategy Benchmark. That index remains suspended.

However, Dow Jones noted that its remaining strategies—Equity Long/Short, Equity Market Neutral, Event Driven and Merger Arbitrage—will continue to be published on an end-of-day basis.

Launched in November 2003, the Dow Jones Hedge Fund Strategy Benchmarks measure individual hedge fund strategies. 

This index doesn't give us new information on the economy itself, only what reporters are saying about it. Just because lots of people say the same thing doesn't make it so, unless there's merit to (1) the wisdom of crowds, or (2) self-fulfilling economic expectations. But in any case, it's an interesting series.

April collectively revealed the DJIA soared 7.4%, the NASDAQ 12.4%, and the S&P 9.4%, pushed higher by a 19.8% rise in financials. On a dollar basis, the gain in Dow Jones shares results into a 12% gain, the record since 1991 when record keeping began.  The S&P also fared well in April, rejoicing in its largest monthly increase in 9 years and now stands 29%higher than its March 9 closing low; the NASDAQ gain proved its best in six. Crude prices soared 18.5% despite record high inventory levels as demand prospects for the second half improved

Nearly 70% of the S&P earnings results reported ahead of analysts' projections. Thursday's mixed market action betrayed disappointment in results from ExxonMobil (NYSE:XOM), downside 2009 guidance from Procter & Gamble (NYSE:PG), a dividend cut from Black and Decker (NYSE:BDK) - a trilogy of Street concern: earnings, outlook and payout. However, Dow Chemical (NYSE:DOW) offered the palliative of a profit in the quarter, a surprise that added 18% to the shares.

China's A-Shares No. 1 In First Quarter

The best performing index in the first quarter was the Shanghai Composite, according to this Investor's Business Daily report.

It notes that a closed-end fund tapping into mainland China's stock exchange, which is largely closed to outside investors,  the Morgan Stanley China A Share Fund (CAF), has gained 49% so far this year. 

The story notes that China-focused ETFs haven't fared as well since they don't invest directly in A-Shares. But technically, they seem to be holding up well, writes IBD markets reporter Trang Ho. 

(Interestingly enough, Van Eck Global has filed to offer the first A-Shares focused open-end ETF. See story here.)

You can read the IBD report here.

Japan Tries Another Round of Stimulus Packages With ETFs

Japanese Prime Minister Taro Aso is moving forward with plans for another round of government-enduced stimulus packages aimed at jolting the country's falling economy. On Tuesday, he ordered officials to buy ETFs and stocks directly to help spur demand, according to this Dow Jones Newswires report.

You can read it here.

Stock Mutual Funds  Reverse Course In February

While several different data collectors provide snapshots of fund flows, the most complete is a survey done each month by the Investment Company Institute. That's due to the fact the ICI is the industry's trade group, so participation is higher and the finding are the most complete available. (It also helps that the ICI doesn't give out any specific fund company details, sticking to overall industry numbers.)

In any case, the latest ICI fund flows report (always a month delayed) came out Tuesday. As reported by Investor's Business Daily, it showed that after a slight uptick in January, investors reversed that trend big-time in February. Bonds were slightly up, however, in the month. 

You can read the story here.

For an explanation of the contrarian stance that makes Schaeffer's so unique, check out a recent version of Trading Tools.

Options speculators stay sunny

According to Zacks, JA Solar bewitched a band of bullish options bettors on Thursday. More specifically, the Chinese solar sultan saw single-day call volume of nearly 15,800 contracts - more than 12 times the security's average daily volume of fewer than 1,300 contracts. Most active was the stock's April 5 call, which saw more than 7,500 contracts cross the tape. Furthermore, the option's popularity extended into Friday's session.

As a result of Thursday's bombardment of bullish bets, the equity's Schaeffer's put/call open interest ratio (SOIR) dipped lower overnight. As JASO call volume shot higher, the stock's SOIR went from 0.21 to its current reading of 0.13, indicating that calls are nearly 10 times more popular than their put rivals among options slated to expire within 3 months. What's more, compared to similar readings taken during the past year, the security's SOIR ranks in the 4th percentile. In other words, short-term options speculators have been more bullishly biased toward JASO only 4% of the time during the past 52 weeks.

Fueling the flood of optimistic options activity was most likely industry-related news out of China. For the first time ever, the Chinese Ministry of Finance said that it will offer a national subsidy for solar energy. Many analysts deem the move rather "generous", considering the subsidy could cover more than half the cost of a solar panel, Dow Jones Newswires reported. In light of the news, a slew of solar concerns joined JASO on options traders' radar Thursday, including LDK Solar (LDK ), Canadian Solar (CSIQ), and Solarfun Power Holdings (SOLF).

Picking up steam on the charts...

The chatter from China also seduced a fresh wave of buying pressure, as the stock shot up 42% on the news. Furthermore, Thursday's journey higher continued Friday, with shares of JASO defying broad-market woes to advance 32 cents, or 8.5%. The security is now flirting with the 4 level, and is poised to close the week atop double-barreled resistance at its 10-week and 20-week moving averages for the first time since May 2008. However, the equity's trek into the black could find a potential speed bump in the overhead 5-to-6 region, as this area has contained the stock's rally attempts since October 2008.

Looking back, JASO's outperformance of the broad market today is nothing new for the alternative energy issue. During the past 20 trading sessions, the equity has outshined the S&P 500 Index (SPX) by 64%. Nevertheless, the stock has attracted a fair amount of skeptics on the Street. According to Zacks, JASO garners only 4 "buy" or better ratings from analysts, compared to 8 lukewarm "holds."

However, this pile-up of pessimism could actually be a boon for the equity in the near term. Should the shares of JASO extend their recent run higher, capitalizing on the news from China, the bears could abandon ship. A round of upgrades or price-target boosts could act as catalysts higher for the stock.

Zacks Investment Research

Watching Options On Sector ETFs

Noting a report by Susquehanna Financial Group, Barron's has a story about how options activity lately on the Select Sector Industrial SPDR (NYSE: XLI) has been bullish. 

You can read the story here.

Barclays Could Pick BGI Winner By Monday

Dueling reports were coming out Friday about prospects that Barclays Plc would need to unload its ETF business, Barclays Global Investors. 

The Financial Times reported that the parent London-based bank had done well on its ongoing stress test by regulators and that it doesn't appear to need to raise more assets. 

However, later Wall Street Journal and wire reports indicated that the auction process was continuing. Bids were to be reviewed over the weekend and a possible decision could come as early as Monday, according to Dow Jones Newswires. 

You can read the DJ story here. A Bloomberg News story on the stress test and bidding process can be viewed here. 

Exchange Cuts Pricing To Battle NYSE

An interesting short piece by the Kansas City Business Journal notes that the BATS Exchange, which says it's the third-largest in terms of value of shares traded in the U.S., is cutting transaction costs to gain some ground on the NYSE.

You can read the story here.

Mutual Funds Vs. ETFs

This article at Financial-Planning.com reviews the mass exodus last year by investors from mutual funds and the continued flow of assets into ETFs. It quotes several leading advisers predicting that trend won't let up anytime soon.

You can read the story here.

Regulation Of Money Market Funds

According to recent statements by U.S. Treasury and SEC officials, government regulators are making plans to increase the level of scrutiny given to money market mutual funds. 

The Wall Street Journal has a brief piece on the matter here.

That shouldn't come as a big surprise to those following the next evolution of a changing iShares brand.

In case you missed it, weekend stories in papers ranging from the Wall Street Journal to the Sunday Times reported that a list of finalists has emerged in the auction of Barclays Global Investors by its parent London bank. Insiders are indicating that Hellman & Friedman LLC could wind up as the leading candidate to assume control of BGI.

As pointed out in the WSJ, that's a private equity firm also based in San Francisco with a history of past relations with the asset manager. Other possibilities, according to the paper, are Bain Capital and other private equity rivals such as TPG and Apax Partners LLP.

Although we've heard some industry veterans arguing against such a scenario—that larger, more-diversified fund companies and brokerages are the more likely eventual winners—the push by private equity players actually makes a lot of sense.

First, the strength of the iShares brand among retail investors might provide a nice counterpoint for a private equity firm, which derives most of its investment flows from institutional investors. Private equity companies are also deeply familiar with the ETF market, as they've proven to be cutting edge participants in the ETF marketplace on the institutional side.

When you add in the fact that the core business of private equity is to capitalize on short-term market dislocations, you can see why a private equity bid for iShares would make sense. As IU.com Editor Matt Hougan told Dow Jones Newswires recently, while iShares is a very attractive asset, most of the obvious bidders are tight on cash. A private equity firm could buy iShares today, run it for a few years and then unload it into an improved market.

Whatever happens, iShares is likely to change, shaking off some of the rust and moving into new ventures. In fact, IU.com Publisher Jim Wiandt thinks its new owner is probably going to be someone who wants to take BGI's existing index-based ETF franchise and expand upon that framework.

In a MarketWatch column by Chuck Jaffe that showed up this weekend, Jim noted that "active is going to happen at iShares; it's a seed that has been planted."

In a recent conversation I had with Lee Kranefuss, the chief executive officer of BGI's iShares business hinted at the same. He explained that BGI was a leader in institutional management of enhanced indexing and other related quantitative strategies that were more active in nature, and that BGI has been studying how a more active sort of ETF could leverage the work done within other parts of the company.

Whether that initiative would be scuttled or delayed by a sale remains to be seen. But recent reports indicate that BGI may want to maintain up to 20% of iShares in any sale.  You can bet that any buyer is probably interested in what BGI is doing in the active space.

And just when you thought you'd seen about all there was to see in the ever-changing world of ETFs ...

Another equal-weight exchange-traded fund based on the S&P 500 is being proposed, this time using Select Sector SPDRs to carve up the index.

The ALPS Equal Sector Weight ETF would track a Merrill Lynch benchmark that divvies up the broad U.S. stock market by its nine major sectors, according to a recent filing still under review by the Securities and Exchange Commission. Each would be represented by a Select Sector SPDR fund. 

"At all times, the Merrill Lynch Equal Sector Weight index will be comprised of the constituents in the S&P 500, albeit in different weights," said the registration statement. 

The fund-of-funds ETF is expected to come with an annual expense ratio of 0.55%. 

The proposed ETF would compete against equal-weight sector portfolios both  from Rydex and ProShares. But one other, the Rydex S&P Equal Weight (NYSE: RSP), actually does much the same as the new ALPS fund would attempt to accomplish. Namely, it includes all sectors under one umbrella.

But there's a caveat. While RSP equal-weights each of the S&P 500's stocks, the new product is giving the same weights to each sector—on a cap-sized basis. 

That should make the new ETF correlate much closer to the actual S&P 500's performance. Also, RSP rebalances on a quarterly basis. 

"It's not a bad idea—we've been big fans of equal-weighting for years," said Anthony Welch, a portfolio manager at Sarasota Capital Strategies. 

He has been using separate Rydex equal-weight ETFs for each sector to come up with an overall mix to match the S&P 500. 

"We'll have to see what the internal costs are going to be for the new SSgA (State Street Global Advisors) equal-weight ETF and how much it rebalances," said Welch. "But with its closer correlation to the S&P 500, and RSP's greater emphasis on mid-cap stocks, it comes down to what you want to equal-weight.

He added: "It comes down to a choice of weighting your portfolio at the stock level or at the sector level."  

You can read the prospectus for the new ALPS/SSgA fund here.

On Tuesday, the media company filed a lawsuit in the U.S. District Court in Delaware accusing Amazon's electronic reader Kindle of infringing intellectual property rights of a patent it had registered in November 2007.

Amazon introduced the second version of Kindle last month for a retail price of $359, calling it the future of book reading. The first model of the wireless device was released in November 2007.

Discovery sought a "fair compensation" through damages for "any future infringement" of the patent but did not seek an injunction preventing sales of the Kindle.

Mylan Inc. (MYL), Barr Laboratories Inc. and Novartis AG (NVS) unit Sandoz Inc. have submitted abbreviated new drug applications (ANDAs) for Solodyn. Israel-based Teva Pharmaceutical Industries Ltd. (TEVA) has already received a nod from federal health regulators to market its generic version of the oral antibiotic and began shipment of the product.

Medicis filed its petition for a 30-month stay on ANDAs of Solodyn, after suing all the generic makers. Solodyn, which is scheduled to lose patent protection in 2018, contributes nearly 50% of the Scottsdale, Arizona-based company's total revenue.

Shares of the company are down more than 11% today.

Fidelity National Financial Inc (FNF) shares are experiencing unusually high trading volume. The Jacksonville-based company's stock jumped over 6% at noon.

More On BGI's Fate

The Wall Street Journal this morning had more on the surprise move by the parent of Barclays Global Investors to hire an investment banker to shop the industry's biggest ETF provider. 

You can read the story here.

Closing Of MarketGraders Will Make It 17 This Year

In an interesting blog at MarketWatch.com about the closing of SPA's MarketGrader ETFs, John Spence notes an analyst report that puts the number of announced closings for ETFs at 17 so far in 2009. 

You can read the story here.

The Name Game Begins

In another blog, Spence does a roundup of stories speculating on potential suitors for BGI.

Even though MarketWatch is part of Dow Jones, he provides links to stories by Bloomberg and Morningstar on the same topic.

You can read the story here.

Top-Rated Commodity ETFs

In this analysis by TheStreet.com, Richard Widows takes a look at how some parts of the commodities market is faring better than others. In particular, he singles out some of the more attractive ETFs. 

You can read the story here.

Bonds Rally In Anticipation Of Friday's Jobs Report

Treasuries rallied on Thursday ahead of today's government report that a poll of economists predicts will show nearly 650,000 jobs lost in February. That would be the worst such Labor Department report in 60 years, according to the Reuters story. 

You can read it here. 

USO Now Controls Fifth Of Most Traded Oil Futures Contracts

In this Wall Street Journal piece, the growth of the U.S. Oil Fund (NYSE: USO) and its impact on trading in volatile energy markets is reviewed.

You can read the story here.

Sector Bets Can Be Risky

That's the theme of Ian Salisbury's latest column for Dow Jones Newswires. You can read the story here.

Indexing Wins In 2008

Sam Mamudi of MarketWatch notes that index funds beat their active rivals last year.

Tapping into Morningstar's database, he reports that the average actively managed mutual fund lost 40.5% and the average index mutual fund 39.1% in 2008. 

You can read the story here.

Counter-Trend Trading Strategies

At Investor's Business Daily, reporter Trang Ho takes a look at trading strategies by some pros in the wake of the current downward trending market.

You can read the story here.