With the S&P 500 and the Dow Jones Industrial Average each
falling more than two percent last week, U.S. equities slid to
their worst weekly performances since June. The culprits were
easy to spot. Reaction, over-exaggerated as it may have been, to
the results of the presidential election gave way to fiscal cliff
fears. When it was all said and done, Friday's meager gains were
not nearly enough to erase the savagery endured on Wednesday and
Anxiety is more amplified because November is typically a good
month for stocks, but that has not been the case thus far. The
longer fiscal cliff fears linger, the likelihood increases that
the bulls will be disappointed this month. A downbeat end to
November could quell hopes for a Christmas rally and that could
portend a bad start to 2013.
Before getting too far ahead of ourselves, it would be wise to
simply focus on the week at hand. The following
should prove useful to traders this week.
iShares Dow Jones U.S. Aerospace & Defense Index Fund
The iShares Dow Jones U.S. Aerospace & Defense Index Fund and
rival aerospace/defense ETFs were highlighted prior to the
as valid post election plays
. Problem is the fiscal cliff has aerospace and defense names
scare in its sights.
It is worth noting Boeing (NYSE:
) was one of the Dow's shining starts last week, but ITA and
other aerospace ETFs will need help from more than just one big
name to endure the fiscal cliff. To be candid, few ETFs would
benefit more from skirting the fiscal cliff than ITA and its
rivals. That also means these funds are among the most vulnerable
should the fiscal cliff come to pass.
Market Vectors Gold Miners ETF (NYSE:
Mining ETFs, the Market Vectors Gold Miners ETF included, are
back to seducing investors and how this story ends is anyone's
guess. Last week, gold soared amid safe-haven buying. The SPDR
Gold Shares (NYSE:
) jumped 3.2 percent while the S&P 500 lost 2.4 percent. GDX
was more inline with GLD with a 1.83 percent gain.
Investors looking for gold exposure might be lured on that
basis. That much is understandable, but GDX tracks equities, not
bullion itself, so caution should be the name of the game here.
Precious metal stocks can only endure a faltering equity market
for so long before decoupling from the metals they are often
iShares MSCI Mexico Investable Market Index Fund (NYSE:
The iShares MSCI Mexico Investable Market Index was
as post-election emerging markets play
that could really be in focus. That focus does not look appealing
now. EWW was flirting with $67 before the election. It closed
Friday below $64.
The ETF must hold support in its current neighborhood or risk
a return to its 200-day moving average, which is just over $61.
If that proves to be firm support, that would be an ideal buy
point for investors looking to get involved with an ETF that has
performed well for much of 2012. In this moment, EWW's forecast
looks cloudy at best.
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