Market Overview

ETF Sleuth: Anything Behind Palladium ETF's Volume Increase?


On any given trading day, there are myriad examples of select stocks and ETFs showing unusual trading volume, but when volume spikes on the day before a three-day weekend, above average turnover is truly noteworthy.

That might be the case with the ETFS Physical Palladium Shares (NYSE: PALL) on Thursday. The ETFS Physical Palladium Shares, the lone U.S.-listed ETF backed by physical palladium, surged $1.18, or 1.89%, to $63.75 on volume of over 200,400 shares compared with average daily turnover of 115,400 shares.

Even with the Thursday pop, PALL is still slightly lower on the year and the ETF has dropped over 8% in the past month after failing to crack resistance around $70, so it can be argued that Thursday's pre-holiday good cheer in PALL is curious.

Perhaps PALL got a charge from some bullish auto sales reported earlier this week. On a related note, the Global X Auto ETF (NYSE: VROM) jumped almost 1.6% today, but volume in that fund was just 40% of the daily average.

PALL's Thursday rise could also be a delayed reaction to a Bloomberg on March 29. Palladium could average $850 an ounce in the fourth quarter of this year, according to the median estimate of 11 analysts surveyed by Bloomberg. From current levels, that would be a gain of over 30% far outpacing the gains expected for gold, silver and platinum.

Citing Barclays, Bloomberg goes on to note palladium prices are poised to rise because carmakers are still using the most metal ever, with the prospect of shortages because of less supply from state reserves in Russia.

Russia is the world's largest palladium producer and South Africa is the second-largest. Coincidentally, the iShares MSCI South Africa Index Fund (NYSE: EZA) gained almost 1% on volume that was better than double the daily average.

On the other side of the increase volume coin on Thursday, the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) slid another 1.6% and touched a new 52-week low on turnover that was about 25% higher than usual. The brutal reality as it pertains to GDXJ, which is down almost 16% in the past month, is that the volume spike isn't all that extraordinary. It may simply be a case of wary investors giving up on gold miners as ETF Trends noted.

Posted-In: Long Ideas News Sector ETFs Short Ideas Specialty ETFs Emerging Market ETFs Futures Price Target


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