A Look Ahead: This Week's ETFs to Watch
Last week was not a pleasurable one for traders and investors as U.S. equities endured week-long selling pressure. By the time the closing bell rang on Friday, the S&P 500 was off 1.5 percent for the week while the Dow Jones Industrial Average had slid 1.8 percent. Amid a spate of disappointing earnings reports in the technology sector, the Nasdaq provided no shelter from the storm.
Indeed, it has been poor earnings reports that have cooled the broader market rally this month. Of the 273 S&P 500 constituents that have reported earnings thus far, 59 percent missed analysts' estimates for sales, according to Bloomberg. That is not a good statistic in any environment, but it is particularly dour when considering it is top-line growth that investors so desperately crave these days.
Perhaps that trend will change as earnings seasons winds down. Maybe it will not. One guarantee is that the following ETFs will be in play in the week ahead.
PowerShares QQQ (NASDAQ: QQQ) All things considered, a loss of half a percent last week for the PowerShares QQQ is by no means terrible. There was some initial negative overreaction to glum earnings from Amazon (NASDAQ: AMZN) and Apple (NASDAQ: AAPL) that weighed on QQQ, but the ETF eventually showed its mettle and did not incur significant damage late last week.
United States Natural Gas Fund (NYSE: UNG) With Hurricane Sandy expected to cause massive flooding along the East Coast and expectations already in place that heating bills will rise this winter, this could be a good week to be long UNG. Alas, those are fundamental catalysts and UNG's chart shows an ETF that is technically vulnerable. Friday's close below $22 was not a positive sign, so UNG needs a pop early this week. The sooner the better.
Energy Select Sector SPDR (NYSE: XLE) A big week of earnings reports could mean big things for the largest energy ETF. XLE was flirting with $77 in early September. The ETF will open around $72 on Monday and if it falls further, it must find support at $70, also the 200-day moving average.
Constituents Anadarko Petroleum (NYSE: APC), Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX), among others, all step into the earnings confessional this week. The first two are particularly interesting because a recent Bloomberg story speculated on possible marriage between the two oil and gas giants.
SPDR S&P Biotech ETF (NYSE: XBI) The selling pressure on biotech ETFs last week likely caught plenty of investors off guard as the sector has been a stalwart this year and ETFs such as XBI have been relative strength leaders for much of 2012. XBI was not the worst offender of the main biotech ETF trio, but the fund did lose almost five percent last week. If the 200-day line just below $85 acts a support, that could prove to be solid entry point for investors to get involved with biotech ETFs once again.
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