ETF Tip Of The Week: November 5, 2012

Mitt says, “By the way, I like coal,” and generates “Romney Rally” in coal and coal ETFs

So said Presidential Candidate Mitt Romney in his debate last month with President Obama.

The full quote went like this: “By the way, I like coal. I’m going to make sure we can continue to burn clean coal.” Addressing the President, Mr. Romney said, “People in the coal industry feel like it’s getting crushed by your policies.”

The quote triggered what has since been called the “Romney Rally” in coal and now with the election upon us, coal continues its bullish ways.

Chart courtesy of StockCharts.com

In this chart of Market Vectors Coal ETF (NYSEARCA:KOL) we can see how coal took off in early October, up some 11% since its late September low and up approximately 9% over the last 30 days.

Market Vectors Coal ETF tracks the market Vectors Global Coal Index. Major holdings include China Shenhua Energy Company, Consol Energy, Peabody Energy and China Coal Energy Company.

As the election approaches, remains in a bullish profile as perhaps investors expect Governor Romney to win on Tuesday and so underpin the coal market when he takes the oath of office in January. SPY Votes For Romney (NYSEARCA:SPY)

However, if you’re not so sure that Governor Romney will win on Tuesday or want to hedge your bet regarding the election, a back up “ETF Tip” would be SPDR S&P 500 Home Builders ETF (NYSEARCA:XHB)

Chart courtesy of StockCharts.com

In this chart of SPDR Homebuilders ETF we can see how the ETF has spiked since the extent of the damage caused by Hurricane Sandy has become more clearly identified. With damage estimates now running as high as $50 Billion, Hurricane Sandy will move into the #2 spot after Hurricane Katrina in the ranking of most damaging hurricanes in history if these estimates are realized.

Of course, these kinds of numbers will generate significant activity in the construction and home building industries and SPDR Home Builders ETF is reflecting this possibility. As always, there are two sides to every argument, Why Hurricane Sandy Might Not Be All That Stimulating, however, one can usually not argue with the charts and win.

SPDR Homebuilders ETF tracks the S&P Homebuilders Select Industry Index and major holdings include Lennox International, Lowe’s and Home Depot.

Recent days have been a challenge, to say the least, for residents of the hard hit East Coast, and now as the new week starts, the world turns its attention to the nail biter election that is shaping up to be a photo finish on Tuesday. Both events will very likely be market movers for U.S. stocks, and these two ETFs are worthy of consideration as today’s dynamic events continue to unfold.

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