Market Overview

ETF Outlook For Friday, June 13, 2014 (IEV, FDN, SMH, FCG, INTC, PCLN, OPEN)

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ETF Outlook for Friday, June 13, 2014

iShares S&P Europe 350 Index ETF (NYSE: IEV)

The ETF showed relative strength yesterday with a small gain of 0.1 percent, as some of the smaller countries in the region were able to outperform. The ETF may not be so lucky today.

Thursday night the head of the Bank of England (BOE) made comments that the central bank may be closer to raising interest rates. The British economy continues to improve and inflation is not a major concern. Expect some weakness in IEV and other European ETFs when the opening bell rings.

First Trust Dow Jones Internet Index ETF (NYSE: FDN)

A $2.6 billion deal that has Priceline Group (NASDAQ: PCLN) buying OpenTable (NASDAQ: OPEN) will have the Internet stocks on the move today.

The cash offer of $103/share for OPEN is a 47 percent premium to yesterday’s closing price for the stock. OPEN makes up 1.23 percent of the FDN portfolio and PCLN is the third largest holding with an allocation of 5.73 percent. The news has OPEN trading much higher pre-market with PCLN up slightly.

Anytime there is major takeover news it will often lead to stocks in the sector moving higher as investors anticipate more deals in the coming months.

Related Link: Semiconductor ETF Up 3 Straight Weeks

Market Vectors Semiconductor ETF (NYSE: SMH)

The ETF is set to open higher today after its largest holding, Intel (NASDAQ: INTC), raised second quarter guidance after the bell Thursday. The stock closed at $27.96 and is set to open just shy of the $30 mark which would be the best level in ten years.

With INTC making up 18.7 percent of the portfolio it will have a major impact on the trading action in SMH today. Any decent move higher will put SMH at its best level since 2002, helping extend the rally in the ETF and the entire sector for 2014.

First Trust ISE Revere Natural Gas Index ETF (NYSE: FCG)

The breakout of oil prices to the highest level in nine months helped the energy stocks outperform the overall market Thursday.

FCG was one of the biggest winners with a gain of 1.4 percent to a new multi-year high. The basket of mainly U.S.-based stocks could be the big winners as the conflict in Iraq puts more emphasis on the need to be energy independent in the U.S. The ETF had already been strong, but the unfortunate news out of the Middle East puts the sector back in the spotlight.

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