A Look Ahead: This Week's ETFs to Watch
Traders and investors – at least those operating from the long side – got what they had been so desperately craving last week when Federal Reserve Chairman Ben Bernanke announced the central bank will purchase $40 billion worth of mortgage-backed securities and keep interest rates low through at least mid-2015. Previous rhetoric had pinned the low interest rate cycle through late 2014.
News of the third round of quantitative easing lit a fire under equities and other riskier assets with the S&P 500 and the Dow Jones Industrial Average both gaining more than two percent on the week. The Nasdaq added more than 1.5 percent.
All of that is in the past and the ball is now in the court of the bulls. Whether or not they drive stocks higher through November's presidential election and year-end remains to be seen. The only guarantees are that there are no guarantees and that these ETFs will be worth watching this week.
Global X Silver Miners ETF (NYSE: SIL)
For as breathtaking as the rally in the iShares Silver Trust (NYSE: SLV) has been over the past month (the ETF is up almost 26 percent), the Global X Silver Miners ETF has been even more impressive. SIL has surged 30 percent over the same time, a run that implies the ETF is overbought. It probably is, but one consequence, intended or unintended, of QE3 is that it should stoke demand for hard assets. Silver is a hard asset. If SIL takes out $26, it has more upside from there.
SPDR S&P Oil & Gas Exploration & Production ETF (NYSE: XOP)
It would be easy to lament the inclusion of XOP on this list and walk away thinking this just another trade with which to indulge the risk on environment QE3 serves as the backdrop for. That would be correct. XOP is up almost 6.6 percent in the past week, indicating that this is one ETF that likes QE3.
There is more to the story. Despite the recent strength, XOP has not experienced a golden cross, the technical scenario in which a short-term moving average cross a long-term moving average. XOP's 50-day line is getting close to the 200-day moving average. The cross probably will not happen this week, but XOP remains in play.
Market Vectors Brazil Small-Cap ETF (NYSE: BRF)
With Brazilian equities and the ETFs that track them under siege for a good portion of 2012, more monetary stimulus should have been just what the doctor ordered for the largest Latin American economy. Maybe it will prove to be just that, but the Market Vectors Brazil Small-Cap ETF might be flashing some ominous signs. Well, one ominous sign. That being the ETF jumped less than one percent last week.
Yes, BRF is up almost ten percent in the past month, but this fund's under performance in the wake of the QE3 headlines is interesting to say the least.
PowerShares NASDAQ Internet Portfolio (NASDAQ: PNQI)
Saying the Nasdaq Composite is going to get back to its 2000 highs in the near-term is a bold forecast, but there is no denying that investors are drawn to the technology sector right now. It is the high-flying names that are doing the leading, too. Getting in the way of PNQI constituents such as Amazon (NASDAQ: AMZN) and Google (NASDAQ: GOOG) here seems fool hardy.
Unheralded, though one can only wonder why since it is home to some of the Nasdaq's biggest names, PNQI can be paired with a long position in Apple (NASDAQ: AAPL) or an ETF that is Apple-heavy. PNQI itself is not home to any slices of Apple.
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