Market Overview

A Look Ahead: This Week's ETFs to Watch

A Look Ahead: This Week's ETFs to Watch

Good news is plentiful in the market these days. The S&P 500 is in the middle of an eight-day winning streak, it's longest since 2004. With last week's gains, the S&P 500 and the Dow Jones Industrial Average are now residing at their best levels since 2007. A fairly docile market environment chock full of solid economic and earnings report has triggered the flight to riskier assets.

To this point, nearly 150 S&P 500 companies have reported earnings and roughly three-quarters of them have topped Wall Street estimates. Obviously, that is a trend the bulls will hope continues this week as they look to keep the bears in hibernation.

It is possible. The week ahead is loaded with marquee earnings reports. Caterpillar (NYSE: CAT), Amazon (NASDAQ: AMZN), Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) among them. Additionally, this will be a week heavy on important economic reports. Among others, the Commerce Department will deliver its final reading on fourth-quarter U.S. GDP and the Labor Department will unveil the January jobs number on Friday. Traders will want to keep an eye on the following ETFs in what is shaping up to be exciting week.

Energy Select Sector SPDR (NYSE: XLE) Alone, Friday has the potential to be a big day for XLE, the largest equity-based energy ETF by assets. Not only is that non-farm payrolls day, but it is also day heavy on energy sector earnings. Exxon Mobil, Chevron and National Oilwell Varco (NYSE: NOV) all report that day and those stocks combine for 36 percent of XLE's weight.

Leading up to those reports, several smaller oil services names also step into the earnings confessional as do ConocoPhillips (NYSE: COP) on Wednesday and Occidental Petroleum (NYSE: OXY) on Thursday. Those two stocks are also top-10 holdings in XLE. With an 8.2 percent gain in the past month, XLE is trading at its best levels since 2011.

Market Vectors Coal ETF (NYSE: KOL) Traders will get some clues about KOL's near-term fortunes as soon as Monday when Caterpillar reports earnings. Caterpillar is not a KOL holding, but the company is the world's largest maker of mining equipment meaning any guidance and backlog data the Dow component provides can be viewed as a tell on what is happening with coal miners.

Speaking of coal miners, Peabody Energy (NYSE: BTU), the largest U.S. coal producer, and Consol Energy (NYSE: CNX) both report this week. Those stocks combine for 13.5 percent of KOL's weight. This could be an important week for KOL. The ETF has not really participated in recent market upside (it lost almost two percent last week) and is in danger of falling below its 200-day moving average, a signal that technical analysts view as bearish.

Guggenheim Solar ETF (NYSE: TAN) One of the year's top-performing sector funds, the Guggenheim Solar ETF has benefited from the Chinese government doing all that it can to help its ailing solar companies. Reserving criticism of China playing savior and overreaction to to Warren Buffett getting involved with the sector for another day, it is still worth noting the solar rally looks a little tired.

Holdings such as LDK (NYSE: LDK) and SunTech Power (NYSE: STP) have doubled in the past month and while that is nice, there are signs that this rally is unsustainable, not the least of which is the fact that TAN closed lower last week as the broader market moved higher.

Also worth remembering is an overlooked fact when solar stocks are moving higher: Solar power is a commodity. As in power providers have alternatives in the form of coal and natural gas. Problem for solar stocks is that unsubsidized solar is still pricier in many markets than traditional sources of electricity generation, implying that this is still a fundamentally flawed sector.

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