ETF Outlook for Thursday July 31, 2014

ETF Outlook for Thursday July 31, 2014

Stocks finished an up and down session yesterday virtually unchanged as investors had a bevy of economic news to digest. First the GDP for the second quarter came in much better than expected, helping push stocks higher. Then there was the ADP Jobs report that was not as strong as anticipated, but was not terrible. Finally, the FOMC meeting adjourned and president Janet Yellen released the statement. Within the statement was nothing ground breaking, which was good enough to keep the bullish sentiment in the stock market and help the major U.S. indices rally from intraday lows.

Today stocks are on the defensive in early trading after a large Portuguese bank cratered nearly 50 percent today. This is having an affect on all of Europe and has spread across the pond to the U.S. Add in the ongoing geopolitical situation and investors are cautious about buying into new positions.

PowerShares DB U.S. Dollar Index Bullish ETF UUP

The statement from the Fed yesterday coupled with the hot GDP number sent the U.S. Dollar Index to the highest level since February. Investors view the currency as the best option around the world, especially if interest rates are going to be increasing in the near future. In Europe the central bank has to deal with slow growth and low inflation and therefore can be more accommodative in its policy and keep the Euro down versus the greenback. Japan is also pushing down the Yen, which is also a boost to the U.S. Dollar and UUP.

Global X FTSE Portugal 20 ETF PGAL

Shares of Banco Espirito Santo fell nearly 50 percent today as the large Portuguese bank reported a loss of $3.6 billion. The news has the Portuguese market down over 2 percent and PGAL is set to open lower on the news. Investors should expect PGAL to open at or near a 2014 low and at this time more selling could be in the future before buyers start to go bargain shopping.

Global X FTSE Argentina 20 ETF ARGT

After rallying 4.9 percent yesterday, ARGT is set to open lower today after the country has officially defaulted on its debt for the second time in just over a decade. Based on the chart there is some support at the $21.50 area, but if this is breached the ETF could continue a dramatic fall. Expect lots of volatility in the coming days.