ETF Outlook for Friday, November 8 (FIW, XLY, EWQ, DIS, IHE)

ETF Outlook for Friday, November 8, 2013

FirstTrust ISE Water ETF FIW

One of the largest water utilities in the U.S. reported earnings this morning and the stock was moving higher pre-market. Aqua America WTR beat earnings by a penny and missed on revenue estimates, but it did not keep investors away from bidding the stock higher.

WTR is a top ten holding in FIW and because it is a well-known and large water utility it should have some spill over to the other stocks in its sector. The other big name to keep an eye on in the sector that is also in the FIW is American Water Works AWK.

SPDR Consumer Discretionary ETF XLY

Walt Disney Corp DIS reported what appeared to be decent earnings yesterday after the bell, but the stock is trading lower by 1 percent pre-market. The parks and resorts segment was up 8 percent, but media networks only increasing by 1 percent. The big driver could have been the pushing back of the release of Star Wars 7 to late 2015 from the summer of 2015.

DIS makes up nearly 6 percent of XLY and is the number three holding in the ETF. The stock should not have too much of an affect on the diverse ETF, but if DIS decides to make a big move it will move the needle.

iShares MSCI France ETF EWQ

Last night Standard & Poor’s downgraded France to AA from AA+, but also raised the outlook from negative to stable. The mixed message was enough to send French shares lower and the yield on French bonds higher.

The ratings firm cited the country’s inability to lower spending as well as the low economic growth as two deciding factors for the downgrade. Shares of EWQ are lower pre-market by nearly 1 percent on the news. The ETF is trading 3.5 below a multi-year high it set two weeks ago and if it fails to hold the $27 area it would be another negative sign technically.

iShares Dow Jones U.S. Pharmaceutical ETF IHE

All major U.S. sectors closed lower yesterday, but the best of the group was the pharmaceuticals with IHE ending the session lower by 0.66 percent. The ETF has lagged the market slightly in the last three months, however with it looking more and more like a short-term pullback is likely, IHE could be an ETF to watch.

The pharmaceutical sector tends to outperform in times of volatility and uncertainty or when the market is simply overbought and due for a pullback. A combination of the scenarios mentioned is happening now and IHE could be a place to park some money.