Market Overview

ETF Outlook for Thursday, November 14, 2013 (FXE, XLY, IGN, EWJ)

ETF Outlook for Thursday, November 14, 2013 FXE, XLY, IGN, EWJ

ETF Outlook for the Thursday, November 14, 2013

Rydex CurrencyShares Euro ETF (NYSE: FXE)

The euro began yesterday down after an ECB member in a discussion with the Wall Street Journal alluded to the fact that more asset purchases or negative rates are tools the central bank would be willing to use.

At the same time the Fed has been seen as tapering their asset purchase soon and the Bank of England is leaning towards tightening as well. But, by the end of trading yesterday FXE was up 0.2 percent because news leaked the Obama’s nominee for Fed president, Janet Yellen, mentioned the Fed had more work to do.

Could the ECB and the Fed both be holding off on raising rates for the foreseeable future? If so, the euro would likely benefit even after the ECB member comments. Look for FXE to continue the turnaround rally if Yellen makes remarks tomorrow at her hearing about doing more with asset purchases.

SPDR Consumer Discretionary ETF (NYSE: XLY)

One of the best performing sector ETFs yesterday, hitting a new all-time high, was XLY. The ETF got a boost form the risk-on trade that hit the markets yesterday after Yellen’s rumored comments as well as good news out of higher-end retailer Macy’s (NYSE: M). The stock was up 9.4 percent yesterday for its biggest one-day gain this year.

The stock closed at a new all-time high and was able to attract money to the consumer discretionary sector ahead of the most important shopping season of the year. Will the consumer once again surprise everyone with a better than expected spending spree? Do not fight the U.S. consumer.

iShares S&P GSTI Networking Index ETF (NYSE: IGN)

Cisco Systems (NASDAQ: CSCO) reported earnings after the bell yesterday that beat estimates, but revenue was light and guidance was below expectations. This sent the stock lower by 10 percent and was bringing down its peers.

The stock is the number three holding in IGN, making up 8.6 percent. Look for the ETF to be down big on the open today as the narrow sector will likely move with one of the biggest names in the industry. If IGN does not hold support at the $29.25 area it would be very negative for the ETF and a major sell signal.

iShares MSCI Japan Index ETF (NYSE: EWJ)

Overnight Japan reported its quarterly GDP number and it came in higher than expected. The annualized number was a gain of 1.9 percent versus the estimate of 1.7 percent. Quarterly the number was 0.5 percent versus 0.4 percent.

The Nikkei opened up higher by over 1 percent on the back of that news as well as the strong U.S. market yesterday. EWJ had a nice day yesterday with a gain of 0.8 percent and should begin today with another gap higher.

Other Japanese ETFs of note include the WisdomTree Japan Hedged Equity ETF (NYSE: DXJ), MAXIS Nikkei 225 Index ETF (NYSE: NKY), and theiShares S&P/TOPIX 150 Index ETF (NYSE: ITF).


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