ETF Outlook for the Week of November 11, 2013 (EEM, IAT, DIA, UGA)
Here is your ETF Outlook for the Week of November 11, 2013
SPDR Dow Jones Industrial Average ETF (NYSE: DIA)
The basket of 30 large-cap stocks hit a new all-time closing high on Friday as the S&P 500 and NASDAQ have yet to break thought their 2013 highs.
The rally in the Dow was led by tech names Microsoft (NASDAQ: MSFT) and Cisco (NASDAQ: CSCO), both gaining over 4 percent last week. Year-to-date the ETF is up 20.6 percent and is lagging the SPDR S&P 500 ETF (NYSE: SPY) and is still an inferior investment choice to the SPY over the long-term. But it is always bullish to have such a widely followed index breakout to an all-time high before a weekend.
iShares MSCI Emerging Markets ETF (NYSE: EEM)
One of the biggest laggards this past week was the emerging market stocks. The major player in the world of emerging market ETFS, EEM, lost 3 percent in the last week and is trading at the lowest level in a month.
This is happening as the Dow hit a new all-time high. The last time interest rates increased in the U.S. it hit the emerging market and the increase the last two weeks has had the same affect on EEM. The level to watch this week on EEM is $40.10, which is important support. The ETF traded as low as $40.75 on Friday before closing at $41.16.
iShares Dow Jones U.S. Regional Banks ETF (NYSE: IAT)
The jobs number on Friday sent the yield on the 10-year Treasury to 2.74 percent, an increase of 5.1 percent from Thursday. This is leading to the creation of a steeper yield curve, which will be good for the banks as they will be more inclined to lend money.
IAT is a basket of regional banks that rely on lending to consumers and small businesses and a pickup in that portion of their business would be a boost to the bottom line. The ETF closed up 3.0 percent on Friday to the best level in five years. Keep an eye on the regionals as they will likely outperform the larger SPDR Financial ETF (NYSE: XLF).
iShares MSCI New Zealand Investable Market ETF (NYSE: ENZL)
The top performing ETF last week with a gain of 2.1 percent, it hit a new high on Wednesday before pulling back with the world markets on Thursday.
The New Zealand benchmark NZX 50 hit a new all-time high last week as it was lead by Xero, a cloud based software company that is now the second largest company in the index. New Zealand is a country that is often overshadowed by Australia, but this year it has been a much better performer by outpacing its neighboring country by 10 percent.
United States Gasoline ETF (NYSE: UGA)
The ETF that tracks the futures price of gasoline has fallen to a level it has hit four times in the last year. UGA hit a low of $53.56 this week before rallying on Friday with the energy commodities.
The chart below shows the multiple times UGA has hit the $53.50 area before rallying. There are two ways to approach this chart. First would be to buy near the support line with a stop-loss at $52.50. The second would be to short the ETF if it breaks below support and confirms a breakdown. This week should give insight into which strategy is the best option.
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