Market Overview

ETFs to Watch This Week

Friday's action was nothing to write home about as the S&P 500, Dow Jones Industrial Average and the Nasdaq all made meager gains. However, a broader view of things indicates this rally is now stretching into its third month. Light volume or not, the bulls seem to be in charge and the bears appear to have very little in the way of ammunition to stop further upside.

Well, that might not be entirely true as the action in one of next week's ETFs to watch indicates:

SPDR Barclays Capital High Yield Bond (NYSE: JNK) It may not be fair to say the just completed week was decidedly risk-on in nature, but for the most part, riskier assets were in fashion. That should have been good news for high-yield bonds and ETFs such as the SPDR Barclays Capital High Yield Bond ETF.

Yes, JNK, the second-largest junk bond ETF, is trading within spitting distance of its 52-week high. However, it is worth noting the ETF closed slightly lower on the week and some analysts might interpret that as a signal equities are ready to correct. It is hard to put a timetable on such matters, but the sooner JNK can reach a new high, the better: the longer this ETF just chops around, the more vulnerable it is to retrenchment.

iShares Dow Jones US Technology Index Fund (NYSE: IYW) Alright, so everyone and his sister knows this already, but Apple (NASDAQ: AAPL) reached a new all-time high Friday. The juggernaut now has a market cap of almost $608 billion, that's an all-time record for any stock. That is significant for IYW, the ETF with the largest weight to Apple.

IYW is a cap-weighted ETF, meaning the larger Apple's market grows, the bigger the stock's weight becomes in IYW. IYW allocated 23.4 percent of its weight to Apple as of the close of markets August 16. Those looking for an ETF proxy on Apple need look no further than IYW.

iShares Silver Trust (NYSE: SLV) The iShares Silver Trust notched a small gain this week, but believe it or not, the volatile ETF has done absolutely nothing over the past three months. SLV has been showing faint signs of life recently and if the risk on trade is reborn in earnest, silver should have some near-term upside. The risk/reward here is favorable as a stop around $25.50 on SLV would be appropriate. That is not much downside from SLV's Friday closing price.

Market Vectors Retail ETF (NYSE: RTH) Plenty of folks have been talking about the quasi resurgence in retail and discretionary ETFs such as the SPDR S&P Retail ETF (NYSE: XRT) and the Consumer Discretionary Select Sector SPDR (NYSE: XLY). The real stud of the retail ETFs lately has been the Market Vectors Retail ETF.

In the past 90 days, RTH has easily outpaced XLY and XRT. Year-to-date, RTH is also the winner with a gain of over 17 percent and the fund currently sports superior relative strength compared to its rivals.

Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) combine for 12 percent of RTH's weight, giving the ETF some exposure to a rebound in home builder equities. Until recently, Wal-Mart (NYSE: WMT), the ETF's largest holding with an allocation of 11 percent, had been a prime driver of RTH's returns.

Despite the recent decline in that name, RTH is one of the stronger and most unheralded ETFs in the retail group.

For more on ETFs, click here.

Posted-In: Long Ideas News Sector ETFs Broad U.S. Equity ETFs Short Ideas Specialty ETFs New ETFs Emerging Market ETFs Best of Benzinga

 

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