ETF Outlook for Thursday, May 8, 2014 (QCLN, TSLA, IGE, EWW, EPHE, XOM)
ETF Outlook for Thursday, May 8, 2014
First Trust NASDAQ Clean Edge Green Energy ETF (NYSE: QCLN)
Red-hot momentum stock Tesla Motors (NASDAQ: TSLA) reported earnings after the bell Wednesday that came in better than expected along with revenue above estimates. However, the stock is down about seven percent in the pre-market as the stock tests important support at the $184 area.
Several ETFs could be on the move Thursday due to the high exposure to the stock. QCLN has a 7.4 percent stake in Tesla and the stock is the third largest position in the portfolio. The Market Vectors Global Alternative Energy ETF (NYSE: GEX) also calls Tesla its third largest holding with a 9.1 percent allocation. Both ETFs have been moving lower in the last two months and should continue that trend on Thursday.
iShares Natural Resources ETF (NYSE: IGE)
The energy-heavy ETF closed at a new multi-year high Wednesday after gaining 0.7 percent and extending its winning streak to four sessions. The ETF is closing in on an important level at $47.81, which is the 2011 high.
A breakout above the resistance level will be a major move for the ETF and could send it much higher in the months ahead. On the flipside, failure to breakout could signal a pullback of at least 10 percent before it can begin a new uptrend. The major holdings of IGE include Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX).
iShares MSCI Mexico ETF (NYSE: EWW)
The neighbor to the south has been quietly breaking out and is now trading at the best level since January. The ETF was up 1.2 percent yesterday and has been up four out of the last five trading sessions.
On a longer-term chart it appears that EWW has broken a downtrend pattern that has been in place for a year. The good volume on the up days over the last two months is another positive for the ETF. The only concern is that EWW is overbought in the short-term, however strong ETFs have been known to continue rallying in the face of overbought readings.
iShares MSCI Philippines Investable Market ETF (NYSE: EPHE)
The Southeast Asian country had its ETF close at the best level in nine months yesterday, however there is another reason to keep an eye on the action this week. The country is at a standstill with China after it has detained 11 Chinese fishermen to determine if they have committed any crimes.
While China is demanding the immediate release of the fisherman, the Philippines have not complied. This may end up being a non-story, but it is something to watch; even more so with the ETF at a multi-month high.
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