ETF Outlook For The Week Of February 24, 2014 (ITB, XLU, SPY, RSX)

ETF Outlook for the week of February 24, 2014

iShares Dow Jones U.S. Home Construction ETF ITB

Last week existing home sales were released and January number showed a decline of 5.1 percent versus last year. Even though the number was not good, the homebuilding stocks rallied to end the week higher.

ITB finished with a small gain of 0.3 percent for the week and closed at the best price since last May. The ETF is now within a few percentage points of the best level since 2007 and ITB could be set to test the $26 area in the coming week. A breakout above last years high would be a major milestone for the sector.

SPDR Utilities ETF XLU

The ETF was an underperformer last year, up only 8.7 percent versus a gain of 30 percent for the S&P 500, but this year it has been a leader. Through Friday the ETF is up 6.8 percent in 2014 versus a small loss for the S&P 500.

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With interest rates moving lower in the last two months versus the estimate for higher rates this year it has made the high-dividend paying utility stocks attractive. If XLU can break above the $41.44 six-year high set last year it would be a new buy trigger for the ETF.

SPDR S&P 500 Index ETF SPY

It has been a tale of two trends for the overall market and SPY this year. A six percent pullback has been followed by a rally that has taken SPY back to its all-time high. On Wednesday the ETF traded one penny above its all-time intraday high before closing down on the session. On Friday the same type of action occurred and SPY closed lower by 0.1 percent.

With the RSI at 80 (overbought) and starting to drift lower the technical are pointing towards a pullback in the next few days. However, all that can be thrown out the window if SPY can close above $185 for a couple days in a row.

Market Vectors Russia ETF RSX

The Olympics are over and the host country ended the event with the most medals out of any country. It was a bit of a surprise, but was it enough to help the country’s stock market and economy? According to RSX, the answer is no.

The ETF is down 11.1 percent in 2014 and the trend is clearly lower over the last few years. Even though the Russian stock market trades at a big discount to its historical average it has not attracted value investors. The unrest that is taking place in the Ukraine has a direct link to Russia and until that is solved or at least calms the ETF is too risky.