Attention Investors: Watch Housing, Volatility And Semiconductor ETFs
The SPDR S&P 500 ETF (NYSE: SPY) overcame the inertia of a sideways trading range to break out to new all-time highs last week. These gains came at the behest of a renewed commitment from the FOMC to hold off on any immediate interest rate hikes until growth factors improve later on in the year.
Looking ahead, several important events this week have the potential to impact the market during the holiday-shortened Memorial Day schedule. Durable goods orders, new home sales data, and the first quarter GDP revision will play an important role in trading.
Here are the key ETFs to watch for the week of May 25.
iShares U.S. Home Construction ETF (NYSE: ITB)
Home construction companies will be under a microscope this week as a deluge of housing data is released. ITB is comprised of 37 companies engaged in manufacturing residential homes. Top holdings include well-known names such as DR Horton (NYSE: DHI) and Lennar Corp (NYSE: LEN).
This ETF currently has over $2 billion in total assets and charges an expense ratio of 0.43 percent. ITB has gained 4.49 percent so far this year and has been able to keep pace with SPY despite its higher volatility.
iPath S&P 500 VIX Short-Term Futures ETN (NYSE: VXX)
The CBOE VIX Volatility Index fell below 12 and touched its lowest levels of the year on Friday. This data generally represents a sense of complacency among market participants, which may provide a counterintuitive roadmap for additional volatility ahead.
Investors should be watching VXX, which tracks options activity on the S&P 500 Index, as a gauge of investor fear. A sell-off in stocks would likely push VXX higher as market participants rush to hedge their bets and anticipate a correction.
Market Vectors Semiconductor ETF (NYSE: SMH)
Semiconductor stocks experienced a violent drop in March that has since recovered nearly all of the lost gains. Now these stocks are once again showing strong relative momentum and appear poised to break out to new highs.
SMH tracks the 25 largest U.S.-listed semiconductor companies such as Intel Corp (NASDAQ: INTC) and Taiwan Semiconductor Manufacturing Co (NYSE: TSM). This ETF has gained 5.80 percent so far this year and has continued to underscore the overall strength in the technology sector.
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