Market Overview

Could The Jobs Report Make or Break These ETFs? (XLB, EWC, SLX)

Following Wednesday's ADP private sector jobs report that showed non-government U.S. employers added 216,000 jobs in February, which topped an estimate of 208,000, a lot of folks are expecting big things on Friday morning when the Labor Department delivers non-farm payroll data for February.

The current Wall Street consensus hovers around 250,000, but there's a case to be made that the number could be higher.

Even if the February jobs report shows the addition of 250,000, that could be enough to send the bears packing for a couple of days at least and support more gains for high beta fare. After waning in recent days, several ETFs could really use a pick me up in the form of a positive NFP number on Friday. Here are a few to keep an eye on.

Materials Select Sector SPDR (NYSE: XLB) The Materials Select Sector SPDR has been a decent performer this year, but what was once a double-digit year-to-date gain has wilted as the ETF has dropped over 4% in the past month. Wednesday's modest gain barely made a dent in XLB's Tuesday tumble and the ETF is still languishing below its 50-day moving average.

XLB's constituency is loaded with economically sensitive companies and none of them would pass up a good jobs report. Some of them, we're looking at you Freeport McMoRan (NYSE: FCX), desperately need it for a near-term boost. Bottom line: Short or stay away from XLB if the market doesn't like the February jobs number.

First Trust ISE-Revere Natural Gas Index Fund (NYSE: FCG) Recently battered by the seemingly never-ending decline in natural gas futures, FCG could get a boost from bullish payroll data because that data may support the notion that utilities are using more natural gas as the economy improves. Then again, FCG's story is misunderstood because of its name. Almost all of FCG's constituents are looking to boost their oil production. iShares Dow Jones Transportation Average (NYSE: ) One look at its chart shows the iShares Dow Jones Transportation Average is laboring below its 20- and 50-day moving averages and that this fund has gotten gradually weaker over the past two weeks. A lot of IYT's woes rest with high oil prices, but when an ETF's roster includes the likes of FedEx (NYSE: FDX), Union Pacific (NYSE: UNP) and some airlines, strong payroll data never hurts. In fact, IYT needs the February number to be strong or the ETF could easily turn negative on a year-to-date basis.

iShares MSCI Canada Index Fund (NYSE: EWC) Arguably, no country takes its economic cues from the U.S. the way Canada does and there is some virtue to investing north of the border. That said, EWC has plunged 4% in the past week. Due to the fact that Canada is the largest importer of oil to the U.S., if any group of non-U.S. country ETFs need a good jobs report on Friday, it's EWC and its brethren.

Market Vectors Steel ETF (NYSE: SLX) The technicals on this high beta ETF have deteriorated rapidly in the past month and the price action is nothing to crow about either as SLX has plunged almost 11%. SLX's U.S.-based components are extremely sensitive to U.S. economic data. That's concerning because the data has been pretty good in the past month and SLX has been dreadful.

Follow me on Twitter @ETFProfessor1

Posted-In: Long Ideas News Sector ETFs Broad U.S. Equity ETFs Short Ideas Specialty ETFs Commodities Technicals Events Global Econ #s Pre-Market Outlook After-Hours Center Markets Trading Ideas ETFs Best of Benzinga

 

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