ETF Headline Watch: Feb. 27, 2012 (GLD, USO, VGK, FXE, XLF)

ETFs  making headlines today focused in commodities, Europe, financials

The trading week started lower with concern over Europe re-emerging and profit taking in commodities.

The G20 Finance Ministers threw some cold water on the European debt crisis and outlook for recovery by refusing to throw more money into the IMF rescue fund until the European Union itself stepped up with more funds on it own.  The action put downward pressure on European ETFs, the Euro Dollar and U.S. Financial stocks and ETFs.

European ETF Summary:

Vanguard MSCI European ETF VGK -1.2% in early Monday trade.  The Fund tracks the performance of the MSCI Europe Index which represents large and mid-cap companies in countries including Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.

CurrencyShares Euro Trust FXE -0.49% at 1030 EST.  The ETF replicates the performance of the Euro Dollar

Commodity ETFs Mixed but making news

Commodity  ETFs were making news early Monday as gold gained and oil declined in early action.

Oil has been on a week long streak and fell today in reaction to the G20s reluctance to prop up Europe and concerns over possible slowing economic activity in the region.

Higher oil prices pose a threat to the global recovery and the commodity is vastly overbought after recent action in the oil market and so, on a technical basis, is due for a correction.

Iran remains a worry as the conflict continues to simmer over its nuclear program and Western nations' embargo of Iranian oil shipments and financial transactions.

Gold prices started lower but then gold ETFs moved higher while silver ETFs declined slightly.

Gold put in recent highs on Friday and so seems to be pulling back slightly on profit taking.

Gold is up approximately 13% year to date on hedge fund buying and concern over a Greek default and potential financial crisis in Europe.  Gold ETFs put in a low in late December and have since rallied approximately 15%.  Hedge funds remain active in the gold ETF market with John Paulson's Gold Fund being the biggest holder of (GLD)

SPDR Gold Trust GLD +0.33% early Monday is the second largest ETF in the world and reflects the price of gold bulllion.  It currently has assets of more than $71 Billion.

United States Oil Fund USO -1.0% at 1100 EST is a commodity pool designed to track the spot price of light, sweet crude oil as measured by the price of futures contracts traded on the New York Mercantile Exchange.

Financial Sector Weak

The financial sector started the week on a down note with Financial Select Sector SPDR Fund XLF -0.2% at 1100 EST. on Monday.  Bank of America lost over 1% in morning action while Wells Fargo and Citi showed gains.  The sector remains in an uptrend that started in late 2011 but that lately has been showing signs of slowing.
Bottom line:  General stock market indexes and ETFs remain overbought on a technical level and responded negatively to news from Europe and high oil prices.  Fundamental and technical indicators would point to the possibility of lower prices ahead.

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