Market Overview

ETF Outlook for the Week of November 18, 2013 (SOCL, IPO, TWTR, ITA, ITB, EWW)

Here is your ETF Outlook for the Week of November 18, 2013.

Global X Social Media ETF (NYSE: SOCL) and Renaissance IPO ETF (NYSE: IPO)

The most anticipated IPO of the last few months, Twitter (NYSE: TWTR) began trading two weeks ago and last week, it was added to both SOCL and IPO. The two ETFs which target very different niche sectors do have some overlap because there have been a handful of big social media IPOs in the last two years.

TWTR makes up 4.4 percent of SOCL and is the eleventh largest holding in the ETF. The top holding is LinkedIn (NYSE: LNKD) at 10.4 percent. The ETF is up 54 percent in 2013.

The stock only makes up 2.5 percent of IPO, but it is the number ten holding in the ETF. IPO marked its one-month anniversary this weekend and is up 2.2 percent since it began trading. The top holding is Michael Kors Holding (NYSE: KORS).

iShares U.S. Aerospace & Defense ETF (NYSE: ITA)

Boeing (NYSE: BA) announced the largest product launch by dollar value in commercial jetliner history with a deal worth $95 billion. The deal is for the next-generation 777x airliner and it includes 259 aircraft.

BA is the largest holding in ITA making up 10 percent of the ETF. ITA closed out last week at the best closing price in history and the news over the weekend could help spark more interest in the sector and the ETF.

iShares Dow Jones U.S. Home Construction ETF (NYSE: ITB)

The top sector ETF with a gain of 4.4 percent last week was ITB. The ETF carries a four-session winning streak into the new week and if the “risk on” trade continues it could send more money into the concentrated ETF.

A close above $23.50 this week would be the signal that the ETF is ready to breakout and start a new sustained uptrend. Until the breakout occurs it is advised to hold back from chasing what appears to be a one-week wonder.

iShares MSCI Mexico Index ETF (NYSE: EWW)

The best performing single-country ETF last week with a gain of 4.75 percent was EWW. For the year the ETF continues to lag other North American indices with a loss of 6.5 percent. The one-week rally should not send investors excitement for the country south of the border into a frenzy.

The chart is clearly still in a downtrend, however the volume did increase as the week came to a close and the ETF rallied. At this point it could be considered an ETF to watch, but not yet a buy candidate.

WisdomTree Hedged Equity ETF (NYSE: DXJ)

DXJ was up 5 percent last week as the Nikkei closed out the week at a 6-month high and the Japanese yen fell to a multi-month low. The ETF owns Japanese stocks and at the same time will hedge the positions in Japan by taking a short position in the Japanese yen. A combination of higher stock prices in Japan coupled with a weaker yen is the perfect recipe for DXJ.

On the flip side if the yen begins to rally it will likely be associated with weaker Japanese stock prices and DXJ would take a bigger hit than an ETF that focuses solely on Japanese stocks. If Japan continues to implement Abenomics, the strategy of the country’s PM, DXJ should continue to benefit and move higher.

Posted-In: ETF OutlookSector ETFs Specialty ETFs New ETFs Previews Pre-Market Outlook Trading Ideas ETFs Best of Benzinga

 

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