Market Overview

ETF Outlook for Tuesday, January 7, 2014 (EIRL, UNG, IAI, ICF)

ETF Outlook for Tuesday, January 7, 2014 EIRL, UNG, IAI, ICF

ETF Outlook for Tuesday, January 7, 2014

iShares MSCI Ireland Index ETF (NYSE: EIRL)

The first bond auction for Ireland since the country’s exit from the EU bailout plan turned out to be better than most expected. The country was planning on selling $3 billion Euro in 10-year debt. The indications were that demand was upwards of $9 billion euro, well above expectations.

The strong demand helped push the yield on the 10-year bond down nine basis points to 3.26 percent. This is well below the 15 percent the bond was yielding at the height of the crisis in 2011. EIRL was a big winner last year with a gain of 43 percent and all indications are that the turnaround in Ireland will continue.

United States Natural Gas ETF (NYSE: UNG)

With record cold temperatures gripping a large portion of the country, the demand for natural gas has increase exponentially. Over the last month there have been some nasty cold spells that have hit everywhere from the Northeast to the South and in between.

See also: ETF Outlook for the Week of January 6

The price of natural gas is often driven by extreme weather and the current situation is no different. UNG rallied to end 2013 with a gain of 9.5 percent and has recently pulled back from a multi-month high. Look for the ETF to open higher today with traders concentrating on the current freezing temps.

iShares U.S. Broker Dealers ETF (NYSE: IAI)

Citigroup downgraded Charles Schwab (NYSE: SCHW) to a hold and is sending the stock down nearly 2 percent in pre-market trading. The broker-dealer is the number three holding in IAI and could have a ripple affect on the other stocks in the portfolio.

Look for IAI to be on the defensive when the market opens this market and have trouble keeping up with the other financial ETFs. The main reason for the downgrade was valuation, SCHW was up 70 percent last year.

iShares Cohen & Steers REIT ETF (NYSE: ICF)

The major stock indices closed lower for the third consecutive session yesterday to begin the year. One sector that was able to attract some buyers was the REITs. Even though most investors are concerned about rising interest rates and what it may do to high-income investments such as REITs, there was some buying yesterday.

The ETF is at a critical level on the charts. ICF closed yesterday at $75.69 after trading down to $74 to begin the year. The $73-$74 area is major support for the ETF going back several years. If ICF were unable to hold support it would be a major sell signal for the entire sector.


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