Market Overview

A Look Ahead: This Week's ETFs to Watch

Coming off a week that was heavy on economic data points, earnings reports and light on dangerous political headlines, U.S. stocks are found hovering at their best levels since 2007. In fact, the S&P 500 is now residing just 5.1 percent away from its all-time high set in 2007 while the Dow Jones Industrial Average is less than four percent away from its all-time high, also touched 2007.

The broader market's recent up leg has been solidified by earnings momentum as nearly three-quarters of the S&P 500 companies that have delivered results have beaten analysts' estimates. That is a trend bullish traders will want to see continue in the week ahead, particularly given the significance of some of the forthcoming reports.

With House Republicans indicating they are in favor of a short-term extension for the deb ceiling, traders will once again be able to focus on earnings reports in the week ahead. That means the following ETFs will certainly be in play.

Technology Select Sector SPDR (NYSE: XLK) Simply put, the week ahead is critical for the near-term fortunes of the $8.74 billion Technology Select Sector SPDR. Google (NASDAQ: GOOG) and International Business Machines (NYSE: IBM) report quarterly results on Tuesday. Microsoft (NASDAQ: MSFT), the world's largest software maker, reports on Thursday.

Oh yeah, some company called Apple (NASDAQ: AAPL) reports after the bell Wednesday. Add those four technology titans up and the result is over 37 percent of XLK's weight. Pivotal to XLK's ability to produce further upside is whether or not the ETF can break some stiff resistance at $29.50. Apple could help (or hinder) that situation.

Market Vectors Oil Services ETF (NYSE: OIH) Buoyed by a strong fourth-quarter report from Schlumberger (NYSE: SLB) last Friday, the Market Vectors Oil Services ETF extended its recent bullishness that has seen the fund surge 7.5 percent in the past month. Last Friday, Schlumberger, the world's largest oilfield services provider, reported a fourth-quarter adjusted profit of $1.08 per share, topping the consensus estimate of $1.07 per share.

That sent shares of Baker Hughes (NYSE: BHI) and Halliburton (NYSE: HAL) rallying 3.7 percent and 3.3 percent, respectively. Those two stocks, which combine for over 15 percent of OIH's weight, report this week. Good news on both accounts could send OIH soaring back to its 52-week high, of which it is just 5.9 percent below right now.

Vanguard Industrials ETF (NYSE: VIS) With Honeywell (NYSE: HON), United Technologies (NYSE: UTX) and 3M (NYSE: MMM) reporting in the week ahead, the Vanguard Industrials ETF (NYSE: VIS) makes for a predictable earnings play. However, due to some sour headlines affecting some other marquee VIS constituents, there is more to the story.

Boeing (NYSE: BA) is still dealing with the the Dreamliner battery fire flap, a situation that has prompted the company to halt production of that aircraft. Last Friday, it was reported that Caterpillar (NYSE: CAT), the world's largest maker of mining and construction equipment, will take a fourth-quarter charge of $580 million, or 87 cents per share relating to accounting issues at ERA Mining Machinery, a Chinese firm acquired by Caterpillar last year.

Caterpillar and Boeing are the fifth- and sixth-largest holdings in VIS, respectively. Even with Boeing's Dreamliner woes out in the open last week, the ETF still gained over two percent.

For more on ETFs, click here.

Posted-In: Earnings Long Ideas News Sector ETFs Broad U.S. Equity ETFs Guidance Short Ideas Specialty ETFs Best of Benzinga

 

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