After having recovered nearly all the losses of the most recent dip, stocks are now poised to make additional gains during the historically strong Christmas holiday week. The SPDR S&P 500 ETF SPY is within close proximity of new all-time highs and the specter of a Santa Claus rally may once gain send it to uncharted territory.
The week ahead features a condensed economic calendar that will be headlined by third quarter GDP data on Tuesday. In addition, the markets will be closed half day on Wednesday and all day Thursday.
Here are the key ETFs to watch for the week of December 22:
iShares J.P. Morgan USD Emerging Markets Bond ETF EMB
Emerging market bonds have experienced their most volatile month of the year, which was capped by Russia raising its key benchmark interest rate from 10.50 to 17 percent. EMB tracks 274 sovereign bonds of over 30 emerging market countries and fell precipitously through the first half of December.
Related Link: Barron's Recap: Oil Stocks To Buy Now
Many of the underlying country exposure in EMB find their economies tied to energy prices, which has put heavy pressure on financial obligations. However, this broad international bond index found stability last week and has the potential to regain its 200-day moving average as credit fears begin to subside.
United States Oil Fund USO
Oil prices rose over 5 percent on Friday and appear to have found an area of temporary support on the chart. USO tracks the daily spot price of West Texas Intermediate light, sweet crude oil and experienced a six-month decline as high inventories and weak demand have led to deflation in energy prices.
Many investors are starting to question whether a short-term low has been established in the oil markets and a rebound in USO may set the stage for additional interest in energy stocks as well.
Health Care Select Sector SPDR XLV
The healthcare sector is the leading major market segment in 2014 and XLV will look to close out the year on a strong note. This benchmark ETF tracks 55 large-cap stocks engaged in biotechnology, pharmaceutical and medical devices.
So far this year, XLV has gained nearly 29 percent and continues to show excellent relative momentum. The healthcare sector will be an important area to watch entering the first quarter of 2015 as well.
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