Market Overview

A Look Ahead: Next Week's ETFs To Watch

Two triple-digit drubbings in three days sent the Dow Jones Industrial Average down half a percent for the week, but it kind of feels like more than that and it definitely feels as though risk appetite is diminishing in a significant way.

Even with all this volatility and plunging commodities prices, the broader market has basically been in sideways mode since February. Plus, there is a silver lining (no pun intended) with falling commodities prices: It makes it that much easier to embrace conservative staples stocks.

With that, let's have a look at some ETFs to watch next week.

1) iShares MSCI Japan Index Fund (NYSE: EWJ): Developed markets should be a place to hideout these days, but Japan is going to have a tough time making the cut. EWJ finished this week in a freefall and if another 10% or so comes out of this ETF, it will be flirting with the post-earthquake lows.

2) Consumer Staples Select Sector SPDR (NYSE: XLP): Admittedly, we've become quite biased toward this ETF recently, but on Wednesday and Friday, the two triple-digit down days for the Dow this week, only four Dow stocks were up each day. In both instances, three of the four were staples stocks.

3) Pharmaceuticals HOLDRs (AMEX: PPH): Keeping with the theme of defense, healthcare and pharma names are a great way to take some of the beta out of a portfolio. That said, PPH looks pretty overextended here, but this trade makes a lot more sense right now than commodities do.

4) SPDR S&P Retail (NYSE: XRT): Retailers deserve some credit as their stocks, broadly speaking, have held up relatively well in what should be a sour market environment for this sector. The May consumer sentiment number released today was a pleasant surprise, though overshadowed by a weak market, and there are some earnings reports still left that could jolt retailers higher.

5) iShares MSCI Taiwan Index Fund (NYSE: EWT): The emerging markets trade probably isn't off, but looks like it's taking a siesta. If you're going to dance with this asset class, do so with one of the more conservative members of the group.

Posted-In: Long Ideas News Sector ETFs Broad U.S. Equity ETFs Short Ideas Emerging Market ETFs After-Hours Center Trading Ideas

 

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