ETF Outlook for Friday, March 28, 2014 (EWZ, UNG, EWP)

ETF Outlook for Friday, March 28, 2014

iShares MSCI Brazil Index ETF EWZ

The breakout last week has continued for the Latin American ETF, with EWZ up 4.6 percent Thursday as it hit a new 2014 high. The ETF was led by a 7.7 percent gain in Petrobras, a major oil and gas company in the country. The ETF has now moved into an extreme overbought level with the RSI reading at 97. This suggests the ETF could be due for a short-term pullback, however when momentum is high an ETF can continue to rally with an overbought RSI for days if not weeks.

United States Natural Gas ETF UNG

The cold weather continues to grip the Northeast and natural gas prices remain high. UNG pulled back to support at the $23.50 area this week before beginning to attract buyers again. The ETF was up 2.7 percent Thursday and closed at a new one-week high as volume picked up. Technically the chart is suggesting the ETF could continue its run to the $26 area based on the recent action.

Related: ETFs Shrugging Off The Selling (DHS, SMH, IGF, INTC)

The one concern that investors have is that once the winter is over will it lead to a major decline in natural gas prices? On the flip side, as more LNG leaves the country it will push up prices here at home. The key will be to watch the $23.50 support area for answers.

iShares MSCI Spain Index ETF EWP

Overnight, a surprise fall in the inflation number out of Spain had a ripple affect across the region. The 0.2 percent annual rate decline in consumer prices was the weakest number since October 2009 and well below expectations. Borrowing costs for Spain and Italy fell to their lowest levels in three years and stocks were trading higher.

The mindset is that the inflation number will lead to more action from the European Central Bank that could lead to a weaker Euro and stronger stocks. The Euro traded down to the lowest level in three weeks after the number was announced. EWP will be a good gauge as to how stocks will react to deflation concerns in the region.