The Best ETFs of the First-Half: ITB, XBI, QQQ, XLY

June 13, 2012, 07:05 am ET, BY Billy- Contributor| Editor: Thomas H. Kee Jr. (Follow on LinkedIn)

Our Trading Reports in this Article:

• ITB
• XBI
• QQQ
• XLY

The first-half of 2012 has been a roller coaster ride for traders as the broader markets had given back a good chunk of their Q1 gain prior to the beginning of June. Conditions appear to have stabilized; at least for the time being. A little more than half of the ETFs tracked by Morningstar are currently in positive territory. After taking out leveraged ETFs, inverse ETFs and ETFs with little volume, here are four of the best performers from the first-half of the year.

Bull Run for the Builders

A major surprise so far this year is the run that the homebuilders have strung together. The iShares Dow Jones U.S. Home Construction Index Fund (NYSE: ITB) has rallied 22.7% year-to-date.

Last month the builder confidence index rose to its highest level since the recession. Demand has been boosted by low interest rates and less expensive housing prices than in years past. However, this ETF could face continued resistance if the job market fails to recover as well.

The SPDR S&P Biotech ETF (NYSE: XBI) has also been off to the races as we approach halftime for 2012. The fund has jumped 22.0% since the beginning of the year. A healthy wave of M&A activity coupled with some notable FDA approvals have given this ETF a second wind.

Silicon Valley in the Spotlight

The tech sector has been one of the better performing sectors in 2012. It should come as no shock that the PowerShares QQQ Trust, Series 1 (NYSE: QQQ) has been a cut above in the first-half. This ETF has risen 12.1% since the start of the year.

The 50-day moving average of QQQ sliced above its 200-day moving average late last year and caught fire during Q1. The tape has not been as impressive in Q2 as the fund has pulled back to the tune of 3.8% over the course of the last three months. The dip has provided value-oriented traders a chance to get back in the game.

One other ETF that has experienced a splendid first-half is the Consumer Discretionary SPDR ETF (NYSE: XLY). It will be interesting to see if this ETF has anything left in the tank for the second-half as the Economic Optimism Index hit a low for the year earlier this week. XLY is up 10.8% on the year.

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