Market Overview

Five Key ETFs For Q4 Earnings Reports


We're back to it. Dow component Alcoa (NYSE: AA) got the ball rolling on another earnings season yesterday after the close and the response has been decent, but the really important earnings updates don't start rolling until Friday when J.P. Morgan Chase (NYSE: JPM) reports before the bell.

Even with next week being a holiday-shortened week, there is still an avalanche of earnings reports, particularly from the financial services sector. And arguably that sector belongs on our list of ETF earnings plays. Then again, it might be too early to be dipping out toes into the murky waters of bank stocks.

For now, we'll let the bank dogs lies and focus on other sector funds that should be on every trader's radar this earnings season. In no particular order...

Materials Select Sector SPDR (NYSE: XLB) With earnings reports from Alcoa and Monsanto (NYSE: MON) out of the way (that's over 12% of this ETF's weight), the Materials Select Sector SPDR has already been an earnings play. In fact, the ETF has just been a solid play in 2012, gaining 4% in the early stages of the year. XLB makes the list not because profit updates from its constituents are important (yes, they are), but more because continued bullishness in this fund and continued weakness in utilities or staples ETFs might just validate the return of the risk on trade. Keep an eye on XLB above $36.

Global X NASDAQ 500 ETF (Nasdaq: QQQV) This will be the first reporting season for the newly minted Global X NASDAQ 500 ETF and it makes our list because the looming earnings updates by and any potential guidance from tech juggernauts Apple (Nasdaq: AAPL) and Amazon (Nasdaq: AMZN) will play a heavy role in legitimizing any early-year rally in stocks. Apple and Amazon combine for over 14% of the Global X NASDAQ 500 ETF's weights. Bulls are hoping those two combined for a banner holiday shopping season.

iShares Dow Jones Transportation Average (NYSE: IYT) OK, it's reasonable to expect the five commercial airlines that call the iShares Dow Jones Transportation Average won't set the world on fire with their profit reports and we say that because oil prices are high. However, railroad stocks represent almost a third of IYT's weight. That group is also one of the best temperature checks on the economy at large. Good reports and guidance from Union Pacific (NYSE: UNP) and friends will keep IYT chugging along, putting a smile on the faces of Dow theorists everywhere.

ALPS Alerian MLP ETF (NYSE: AMLP) Alright, the ALPS Alerian MLP ETF might be a stretch on this list, but as we have noted the importance of MLPs cannot be diminished in this low yield environment. The thing to watch for with AMLP constituents isn't earnings as much as it distributable cash flow guidance and/or news on payout increase.

iShares S&P Global Energy ETF (NYSE: IXC) Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) account for over 23% of this ETF's weight, but we're far more interested in what BP (NYSE: BP), has to say about its dividend and asset sales. Royal Dutch Shell (NYSE: RDS-A) is another dividend play in IXC to watch. Schlumberger's (NYSE: SLB) is always worth listening to.


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