U.S. stocks ended last week on a slightly downbeat note, but
Friday's glum action was a mere bump on the road of more weekly
gains for the major U.S. indexes. Investors might want to cherish
the memory of those gains, at least for the next day or two,
because Monday's open could be nasty one.
Once a gain, a small Eurozone member is seen roiling global
equity markets as Cyprus, an island nation of just 1 million
citizens, is flirting with a run on its banks. That is because
Cyprus' parliament, on Sunday, delayed a vote on taxing bank
deposits at a rate of 6.75 percent for deposits under $131,000
and 9.9 percent for deposits over that amount.
Those are the conditions of a bailout program agreed to buy
the sixteen other Eurozone nations and the International Monetary
Fund. If Cyprus does not comply, it could go bankrupt and be sent
packing from the Eurozone. And there is one obvious reason why
stocks and other risky assets could struggle today. With that in
mind, here are a few of the
to keep an eye on in the week ahead.
ProShares UltraShort MSCI Europe (NYSE:
) One reason Cyprus' banks are ailing is over $5 billion in bad
bets on Greek debt. Neither Cyprus, nor Greece command
significant percentages in the Vanguard MSCI Europe ETF (NYSE:
), the ETF that the ProShares UltraShort MSCI Europe is
double-leveraged inverse equivalent of.
That does not matter because Sunday's Asian session, which
included a plunging euro, a soaring U.S. dollar and tumbling
S&P 500 futures, indicates even tiny Cyprus could be a
significant near-term hurdle for the bulls. EPV looked liked it
had potential to deliver for traders in late February on the
back of the Italian election results
, but upside did not materialize in impressive fashion.
Still, EPV is in an ideal situation to move higher this week.
Two areas to watch: Resistance at $25 for EPV and support at $49
for VGK. Breaks of those price levels could mean a very tough
week in which to be long.
iShares Gold Trust (NYSE:
) Gold's trials and tribulations to start 2013 are
well-documented. The bears love it and the gold bugs are getting
pensive and worrying that bullion's 12-year bull run could be at
an end. Last week, Barclays slashed its gold price target to
$1,646 per ounce from $1,778,
saying the yellow metal lacks catalysts
Cyprus certainly qualifies as a catalyst. Gold rising above
$1,600 per ounce for part of Monday's Asian session proves as
much. Not to mention, traders appear to be doing some dip buying
in gold. Hedge funds and other market participants boosted net
long exposure to gold across 18 U.S. futures and options in the
week ended March 12 by 30 percent to 528,680 contracts, the
biggest gain since July and up from a four-year low the previous
Bloomberg reported, citing U.S. Commodity Futures
Trading Commission data.
IAU is a buy above $15.20.
Direxion Daily Emerging Markets 3X Bear Shares (NYSE:
) If there is any good news about the broader emerging markets
universe this year, particularly the BRIC quartet, is that
valuations are cheap and perhaps attractive
. Thanks to Cyprus it would cheap is about to turn to "cheaper"
given the proclivity of emerging markets equities to be adversely
impacted by goings on in the eurozone.
As for EDZ, here is why this triple-leveraged play makes this
week's list. It is the inverse equivalent of the iShares MSCI
Emerging Markets Index Fund (NYSE:
), an ETF
with a concerning chart
. If EEM drops another four percent, it should catch support at
its 200-day moving average. EDZ holders will love that because
that likely means a gain of 11 or 12 percent.
That could happen this week. After all, EDZ jumped almost
eight last week alone.
For more on ETFs, click
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