ETF Outlook for Friday, December 20 (REM, USO, IBB, FCG)
ETF Outlook for Friday, December 20, 2013
United States Oil ETF (NYSE: USO)
The price of oil spiked on the open Thursday and USO held on for a gain of 0.8 percent even though it closed well off the intraday high. The ETF hit a new two-month high as the energy commodities continue to outperform their peers.
On the flip side was gold, which hit a new multi-year low. As long as USO can hold above the breakout level of $35/share it could in the early stages of beginning a new uptrend.
iShares Mortgage REITs ETF (NYSE: REM)
The mortgage REIT sector has been hit hard the last few months as the dividend cuts continue to be announced. On of the largest in the sector and one of the largest holdings of REM lowered their dividend payout again last night.
Annaly Capital Management (NYSE: NLY) lowered the quarterly dividend from $0.35 to $0.30, a decrease of 14 percent. The annual yield remains extremely high at 12.2 percent and the stock trades at a massive discount to book value, however the trend of lower payouts and rising interest rates are not good signs for the sector and REM.
iShares NASDAQ Biotech ETF (NYSE: IBB)
An announcement after the closing bell yesterday that Jazz Pharmaceuticals (NASDAQ: JAZZ) is offering to buy Gentium (NASDAQ: GENT) for approximately $1 billion had both stocks trading higher. JAZZ is not a large position (top 15) in IBB, but the news of more mergers in the biotech sector can be viewed as a positive for all stocks in the sector.
The trend of M&A activity in biotechs as well as related sectors should continue into 2014 and today the news from last night could be enough to see IBB close higher.
First Trust Natural Gas Index ETF (NYSE: FCG)
The natural gas stocks finally began to move yesterday and may catch up to the big move that has been made in the natural gas futures. The futures are at the highest level since July 2011, but the ETF that tracks the stocks has been in a downtrend for the last two months.
The bullish news is that FCG held important price support at $18.75 and today rallied to close at $19.10. The RSI also triggered a buy signal and if the move in the natural gas futures continues it should boost interest in stocks that make up the ETF.
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