Small Cap, Cyber Security, and China ETFs To Watch This Week

Stocks are heading into the final trading days of the year near all-time highs, but the tone for how the markets close out 2014 will likely play a big role in a successful start to the New Year.  

Despite volatile moments along the way and plenty of doubters, the SPDR S&P 500 ETF (SPY) has jumped more than 15 percent this year.

The week ahead features another condensed economic calendar that will feature housing and manufacturing data. In addition, the markets will be closed on Thursday for New Years.  

Here are the key ETFs to watch for the week of Monday, December 29:

iShares Russell 2000 ETF (IWM)

The Russell 2000 Index has lagged both large and mid-cap stocks this year as investors have sought more established companies to harbor their assets.  However, market technicians have noted recent strength in small cap stocks, which has lifted IWM out of its year-long consolidation phase.

Continued momentum in this heavily watched ETF may draw interest from money managers looking to reposition assets in growth areas for 2015.  However, IWM will need to prove this breakout is more than just a short-term move to convince naysayers.  

PureFunds ISE Cyber Security ETF (HACK)

The highly publicized hacking of Sony Pictures content along with follow up exploits in Sony Playstation and Microsoft Xbox services should put a heavy emphasis on cyber security this week.  The newly minted exchange-traded fund HACK tracks an index of 25 companies engaged in online protection and security efforts.  

HACK has quickly attracted more than $85 million in total assets along with consistent daily trading volume since its debut.  This growing industry could potentially be a heavy focus for large companies to protect their data and for investors to exploit through a diversified investment vehicle.  

iShares China Large Cap ETF (FXI)

Chinese stocks are once again flexing their strength, with FXI gaining more than 3 percent on Friday and within sight of new 52-week highs.  This ETF focuses on 50 large-cap Chinese stocks and has been one of the strongest emerging market economies in the fourth quarter this year.

FXI will be worth watching closely because of its outsized impact on the emerging market segment.  Many of these international stocks have far to go to catch up to the red-hot U.S. market and may spark interest from overseas investors wary about troubles in Europe.