UAE Poised For Plunge As Dubai Stock Exchange Crashes Into Bear Territory
ETF Outlook for Tuesday, June 24, 2014 (UAE, XRT SPY, CU, FCX
iShares MSCI UAE Capped ETF (NASDAQ: UAE)
The Dubai stock exchange crashed last night with an 8 percent loss, putting the Middle East stock market firmly into bear market territory. This comes one year after Dubai was one of the top performing stock markets in the world. Even though the selling has been rampant the last few days, the Dubai Index remains higher by 19 percent in 2014.
The volatility has typically been above average in the region, but last night's sell-off will definitely grab headlines. Some of the blame for the selling has been put on Arabtec, which is down the 10 percent limit for three consecutive days after layoffs, insider selling, and the resignation of the CEO. The stock is not in the top ten holdings for UAE, but investors should be ready for UAE to open today’s session down big.
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SPDR S&P Retail ETF (NYSE: XRT)
The ICSC Retail Store Sales and the Redbook Chain Store Sales numbers hit the wires before the opening bell today with insight into how the consumer is holding up. At 10am the Consumer Confidence reading for the month is released, which could give even more of a look into the health of the consumer.
What will the data bring for XRT? XRT is trading near an important resistance level. The ETF has failed to break out above the $88-$89 area several times since last year and if it can finally breach the ceiling it would be a major buy signal and help propel the overall market.
SPDR S&P 500 ETF (NYSE: SPY)
The low volume/low volatility theme continues in the US stock market as the S&P 500 closed out yesterday with one of the lowest volume days in the last year. The less than five-point trading range on the index amounted for an intraday trading range of 0.25 percent. That was the third smallest intraday trading range in the last 20 years.
More investors are starting to think it is the calm before the storm. However, low volatility can simply mean the buyers are taking a break (reason for the volume to decrease) and the sellers are clearly not in control or the market would be lower. Therefore, the action could very well be bullish in SPY.
First Trust ISE Global Copper Index ETF (NASDAQ: CU)
The ETF is a basket of copper stocks from around the globe. Canada has the largest exposure at 38 percent, followed by the U.K. at 20 percent, and the U.S. at 15 percent. Yesterday the stock rallied 1.6 percent to close at a new 52-week high.
Shares of the ETF’s top two holdings, Southern Copper Corporation (NYSE: SCCO) and Freeport-McMoRan Copper and Gold (NYSE: FCX) both had strong days helping the ETF breakout. The long-term chart for CU and the copper stocks remains bearish, but the recent action could be the start of a more sustainable bull market.
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