ETF Outlook For The Week Of January 20, 2014 (RWL, QCLN, MUB, UUP)
ETF Outlook for the week of January 20, 2014
RevenueShares Large Cap ETF (NYSE: RWL)
The heart of earnings season begins on Tuesday when the market reopens after the long weekend. A large portion of the S&P 500 is set to report and the market is expecting earnings to increase by 6.1 percent versus the fourth quarter of 2012.
RWL is an ETF that owns the same stocks that are in the S&P 500, but instead of being ranked by market capitalization, the ETF uses top line revenue. The top two holdings are Wal-Mart (NYSE: WMT)and Exxon Mobil (NYSE: XOM). The ETF is down 1.1 percent in 2014.
First Trust NASDAQ Clean Edge U.S. ETF (NYSE: QCLN)
Last week Tesla Motors (NASDAQ: TSLA) broke out to a multi-month high on the biggest volume in months. The stock is now on its way back to retest the all-time high set in September of last year. The stock is the number one holding in QCLN, making up 9.5 percent. Before pulling back on Friday, the ETF was trading at the best level since late 2008.
The top holdings in QCLN could be considered momentum stocks with Cree (NASDAQ: CREE) and First Solar (NASDAQ: FSLR) both favorites of the traders. As earnings come out and volatility increases in the market look for some momentum stocks to have the biggest moves and QCLN could be up for a wild ride.
iShares S&P National Municipal Bond ETF (NYSE: MUB)
The yield on the 10-year Treasury bond fell to its lowest level in over a month on Friday as it hit 2.82 percent. The inverse relationship yields have to bonds means that bond prices have been rising over the last few weeks. The municipal bonds have been attracting buying since the new year began and MUB closed out last week at its highest level since June of last year.
The distribution yield on MUB is 3.11 percent, but more importantly the tax equivalent distribution is 5.5 percent. The yield is higher than the 10-year and the finances for many municipalities have been slowing improving, suggesting MUB is a better option than U.S. Treasury bonds.
PowerShares U.S. Dollar Index Bullish ETF (NYSE: UUP)
The Fed taper is underway, but the speed at which it will continue is up for debate after a terrible jobs number earlier this month. Even though an accelerated taper would be good for the U.S. Dollar and that does not appear to be the current path, UUP is still doing well.
The ETF closed at a one-month high last week and when comparing the greenback to its foreign peers it has the best setup to continue higher into mid-2014. A close above $22.00 this week would be a new breakout for the ETF.
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