Market Overview

ETF Outlook For The Week Of January 6, 2014 (THD, IEZ, XLF, XLU)

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ETF Outlook for the week of January 6, 2013

iShares MSCI Thailand Investable Market Index ETF (NYSE: THD)

Thai stocks are off to their worst start in 25 years as the protests continue to expand around the country. On Saturday one of the biggest gathers took place and more are planning for the coming weeks.

This has led to a drop in tourism as airlines are beginning to cancel future flights based on a decrease in demand. THD is down nearly 10 percent in the first two trading days of the year and is sitting at the lowest level in two years. The selling has also put pressure on the Global X FTSE ASEAN 40 ETF (NYSE: ASEA), which is close to a multi-year low after falling 3.4 percent in the first two trading days of 2014.

iShares U.S. Oil Equipment & Services ETF (NYSE: IEZ)

Barron’s highlighted National Oilwell Varco (NYSE: NOV) this weekend as a potential winner in 2014 with upside of 30 percent. The stock and its peers could be on the move Monday morning after the mention.

See also: Earnings Expectations for the Week of January 6

The stock hit a 52-week high in November before pulling back the last six weeks. The stock is the third largest holding in IEZ, making up eight percent of the portfolio. The chart of IEZ practically mirrors that of NOV and any move higher in NOV should have a direct affect on the ETF.

SPDR Financial ETF (NYSE: XLF)

The major indices pulled back to begin the New Year as the financial stocks bucked the trend and many hit new multi-year highs. XLF closed out last week at the best level since 2008, led by a surge in Bank of America (NYSE: BAC).

Bank of America is up 5.4 percent in the first two days of the year after an upgrade helped fuel big volume buying. The stock is the fourth largest holding and makes up 6.5 percent of the ETF allocation. The number one holding is JPMorgan Chase (NYSE: JPM), which is trading at the best level since 2000.

SPDR Utilities ETF (NYSE: XLU)

With interest rates on the rise it makes the higher yielding sectors less attractive to investors seeking income. The utility stocks are often viewed as equity income plays as well as safe havens. Both strategies are lacking demand from investors and this has pushed XLU to the lowest level in nearly three months.

A 1.9 percent loss during the first two days of the year on heavy volume is a bearish sign to begin the New Year. If XLU cannot hold support at $36 during the pullback it will be an ominous sign for the sector.

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