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Small Cap, Treasury Bond, and Gold ETFs To Watch This Week

June 7, 2015 12:14 pm
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The first week of trading in June is now in the books and traders are like wondering if the summer will bring fresh opportunities or heightened risks.  

Many factors have weighed on the markets this year including a Greek default, Federal Reserve policy changes, and lofty equity valuation levels.  Nevertheless, the SPDR S&P 500 ETF (SPY) has managed to log a total return of 2.51 percent and may be setting up for a second half ramp higher.  

The economic data points that have the potential to impact trading this week include: federal budget, May retail sales data, and consumer sentiment readings.  

Here are the key ETFs to watch for the week of June 8:

iShares Russell 2000 ETF (IWM)

Small-cap stocks have shown remarkable resiliency and IWM managed to jump 1.22 percent last week.  This well-known benchmark has over $29 billion dedicated to 2,000 companies with market capitalizations less than $2 billion.

IWM has gained 5.15 percent so far this year and has the potential to break out to new highs this coming week.  Additional momentum in this space may be just what the markets need to rejuvenate growth in the second half of 2015.

iShares 7-10 Year Treasury Bond ETF (IEF)

The better than expected jobs report sent U.S. bond yields soaring last week.  This event adversely impacted the intermediate-term Treasuries that make up IEF.  This fund has $6.4 billion allocated to 21 Treasury bonds with an effective duration of 7.71 years.

IEF hit its lowest level of the year on Friday and will be an important area of the market to monitor in the week ahead.  The current pace of declines likely represent bond traders positioning for a late-2015 rate hike by the Federal Reserve.

Another jump in interest rates may demonstrate anxiousness in the bond world, similar to the quantitative easing taper announcement in 2013.  

SPDR Gold Shares ETF (GLD)

Precious metals have traditionally been a flight to quality instrument during periods of stock market volatility.  However, gold prices fell heavily last week and are continuing to propagate a multi-year downtrend.   

GLD tracks the daily spot price of gold bullion and fell 1.63 percent over the last five trading sessions.  This ETF will face a critical test of support in the month of June and the $110 level should be a key area to watch for precious metals investors. 

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