ETF Outlook for Wednesday May 7, 2014 (KWEB, EWJ, VNM, XRT)

ETF Outlook for Wednesday May 7, 2014

KraneShares China Internet ETF KWEB

After the bell last night the Chinese e-commerce giant, Alibaba, reported it has filed for an IPO in the U.S. The company that makes up 80 percent of the e-commerce in China is expected to be one of the biggest IPOs in the history of the U.S. With several of Alibaba’s peers in the portfolio of KWEB it will be interesting to see how the ETF reacts to the news. There is some consensus that believes the Chinese Internet stocks will fall in a, “buy the rumor, sell the news” situation. Year-to-date KWEB is down 2.1 percent.

iShares MSCI Japan Index ETF EWJ

The Japanese stocks got crushed over night with the broad-based Nikkei closing down 2.9 percent to the lowest level in three weeks. The fear of the Bank of Japan not implementing fresh stimulus had stocks on the move and the Japanese Yen moving higher. EWJ will start out the morning on the defensive after three straight down sessions. Since it began to sell-off at the end of January the ETF has been making lower highs and lower lows, suggesting it is in the midst of a downtrend. The next target area on the downside is $10.50. The ETF is down 8.2 percent in 2014.

Market Vectors Vietnam ETF VNM

The frontier market ETF started out 2014 on a tear, rallying over 20 percent in the first six weeks. However, the last couple of months have not been kind to investors in VNM and the ETF closed down another 2 percent yesterday to the lowest level since January. There is speculation that leveraged buyers have been selling shares in the last few weeks, pushing prices lower. Today the country’s largest money manager, Andy Ho, came out and said he has, “been very busy buying stocks these days”. He views the pullback as an opportunity to buy stocks with cheap valuations. The ETF is up 2.2 percent in 2014.

SPDR S&P Retail ETF XRT

Retail stocks took a hit yesterday to the tune of 1.7 percent as XRT fell on above average volume. The ETF had been in the midst of a recovery as it had rallied five straight days heading into Monday. The sell-off the last two days wiped out all the gains from last week. There are concerns over future earnings after a number of retail-related stocks reported far from encouraging reports over the last two weeks. The support level that must be held in the short-term is $80.75. The ETF is down 6.7 percent in 2014.