ETF Outlook for the Week of December 16, 2013 (ARGT, XRT, FEZ)
ETF Outlook for the Week of December 16, 2013
Global X FTSE Argentina 20 ETF (NYSE: ARGT)
An article in Barron’s over the weekend highlighted YPF (NYSE: YPF), an Argentinean oil and gas company. The publication suggested the stock could be worth three times the current share price based on its reserves. The stock is the third largest holding in ARGT, making up 7.6 percent of the portfolio. The top two holdings are metal company Tenaris and the Latin American Ebay, Mercadolibre.
The ETF could get a pop on the weekend article, but investors must beware of the larger issues the country of Argentina is facing. They currently are dealing with weak GDP growth, high inflation, and a falling currency. ARGT is a risky play even though it is well diversified among the large-cap names in the country.
SPDR S&P Retail ETF (NYSE: XRT)
The last full week of holiday shopping is under way and so far the sales have been okay at best. The consensus is that shoppers have been trained to wait until the last minute to begin their holiday shopping as they search for the best deals. The retail stocks have been mixed with no clear pattern as to which retailers are going to come out of the season as the winners. XRT has fallen by nearly 4 percent from its all-time high set in November and is now attempting to hold important support.
From a technical perspective the ETF is flashing a buy signal heading into the new week. The pullback was modest at 4 percent, it is holding above the 50-day moving average, and is entering the week on price support at $85. Add in an RSI reading that is about to give a buy signal and all signs point to a rebound in the retailers heading into Christmas.
SPDR Euro Stoxx 50 ETF (NYSE: FEZ)
The European stocks are set to open the week with a rally after solid news about the manufacturing sector in the region. The Eurozone Flash PMI came in at 52.7 for December, the highest reading in 31 months. The increase came after two successive months of declines. The numbers suggest that GDP growth for the fourth quarter could come in with a small gain near the 0.2 percent level.
FEZ is composed of 50 large-cap European stocks with a heavy weighting towards France, Germany, and Spain. Only countries in the European Union will be considered for the ETF; this is why the United Kingdom is not represented in FEZ. The financials make up 26 percent of the ETF, followed by the industrials and health care. The ETF closed out last week sitting on important support at the $39.50 area, but an RSI buy signal was triggered on Friday and technically the ETF is setting up for a rally.
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