ETF Outlook for Thursday, December 19 (FXY, GLD, XLF, FDN)
ETF Outlook for Thursday, December 19, 2013
Rydex CurrencyShares Japanese Yen (NYSE: FXY)
After the Fed taper announcement the pressure on the Japanese yen increase and the currency is not at its lowest level versus the U.S. dollar since 2008. It appears the Bank of Japan is now the central bank that will be able to devalue its currency with the greatest success.
The move by the Fed will give the central bank less power in artificially keeping the value of the greenback lower. Shares of FXY fell by 1.4 percent on Wednesday and there does not appear to be any significant support for the ETF in the area.
SPDR Gold ETF (NYSE: GLD)
The immediate reaction after the Fed announcement was positive for gold as it rallied one percent from the low of the session. The gains did not hold and investors realized that if the precious metal could not rally with help from the Fed, it would have an even more difficult time with the taper underway.
GLD finished lower by 0.8 percent and is now only six cents above the low set in early December. More weakness Thursday will have the ETF at a multi-month low and in danger of breaching the multi-year low set in late June of this year.
SPDR Financial ETF (NYSE: XLF)
The Fed announcement sent stocks of nearly every sector higher yesterday, but one of the big winners were the financial stocks. When the closing bell rang Wednesday, XLF was higher by 2.4 percent after being in the red at one point.
The ETF finished the day at the highest closing price in over five years as investors realized a slow taper was good for stocks and in particular the financials. Not only was the breakout positive for XLF, but also the volume at which the ETF hit a new high yesterday was the best in months.
First Trust Dow Jones Internet Index ETF (NYSE: FDN)
The technology stocks and the NASDAQ Composite were the hardest hit sector yesterday before the Fed announcement. FDN was able to rebound with turnarounds in their biggest holdings from losses to gains by the end of the day.
The likes of Google (NASDAQ: GOOG) and Amazon.com (NASDAQ: AMZN) led the way for FDN to end the day up 1.3 percent at a new all-time high. Look for more gains for the ETF as it is clearly a leader not only technology, but in the overall market.
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