A Look Ahead: This Week's ETFs to Watch
Last week, also the final week of the third quarter, was a glum one for U.S. equities as the S&P 500 gave up 1.3 percent. That was the worst performance for the broader market index since June and it was no surprise as Europe is once again seen roiling global markets. Austerity-related protests in Greece and Spain hampered gains for riskier assets and served as a stark reminder that the eurozone is still far from out of the woods.
Still, the just completed third quarter was the best third quarter for U.S. stocks since 2010 with the S&P 500 gaining almost six percent and the Nasdaq gaining just over that. The Dow Jones Industrial Average finished the quarter with a gain of over four percent. October, a month with an interesting reputation as it pertains to stock performance, is now here.
Over the past two decades, the Dow has risen an average 1.8 percent in October with positive returns 70 percent of the time, Bloomberg reported citing data from Bespoke Investment Group. We shall see if that track record holds true to form starting this week. Use the following ETFs in the week ahead to take the a temperature check on risk appetite.
Health Care Select Sector SPDR (NYSE: XLV)
This is not an endorsement of one candidate over another, but some analysts have said an Obama reelection benefits pharmaceuticals stocks and ETFs more than a Romney win. The market will ultimately decide that, but with about five weeks left until Election Day, now is the time to start monitoring and trading ETFs that are firmly in the cross hairs of the election result. XLV certainly fits that bill.
iShares MSCI Spain Index Fund (NYSE: EWP)
At least one Europe ETF had to make this least and it is no surprise that is one of the most controversial. EWP is off almost seven percent in the past week and that decline has made this ETF technically vulnerable. Technical vulnerability is not a good thing when Spain's poor fundamentals are splashed across the headlines all over the world on an almost daily basis.
If EWP continues to fall, it must find support in the $26 area, either just over that number or just below it. That is where the 200- and 50-day moving averages lie and a violation of both would inevitably increase the selling pressure on EWP.
iShares MSCI Philippines Investable Market Index Fund (NYSE: EPHE)
An interesting pick given that there are more heavily traded and volatile emerging markets ETFs to choose from. There are two reasons why the iShares MSCI Philippines Investable Market Index Fund makes the list.
First, the ETF is once again nearing the $31 area, which has proven to be stiff resistance multiple times in the past. A strong volume break of that price level should confirm a new leg higher for EPHE. Second, the fund as been one of the more resilient emerging markets ETFs in recent weeks. Last week, EPHE was up almost one percent while the Vanguard MSCI Emerging Markets ETF (NYSE: VWO) was off by the same amount.
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