Outlook for Friday, July 25, 2014
The three major indices closed yesterday essentially flat,
each within 0.1 percent of its Wednesday close. The ho-hum day
was a battle among bears who cheered some weak housing data and
bulls who saw more evidence that second quarter earnings are
stronger than expected.
First Trust Dow Jones Internet Index ETF (NYSE:
Shares of online retailer Amazon (NASDAQ:
) will be weighing on the entire market, but especially FDN, as
it has a 9 percent allocation to the stock. Yesterday the stock
hit a mutli-month high, but is down 10 percent this morning after
reporting earnings last night that failed to impress Wall
Look for FDN to give back some of its gains it had yesterday
after top holding Facebook (NASDAQ:
) reported strong earnings. Facebook makes up 9.1 percent of the
Earnings Beats Drive ETFs; LinkedIn Boosts Social
iShares Dow Jones U.S. Regional Banks ETF (NYSE:
The smaller banks led the sector ETFs with a gain of 1.1
percent and made an important move on the charts.
The ETF has remained above its 200-day moving average for
years, and in May the ETF pulled back to the indicator before
rallying 10 percent. On Wednesday the ETF once again touched the
200-day moving average before rallying into the close, followed
by more gains yesterday.
A purchase of IAT at the current level might give investors an
extremely high reward versus risk setup. The ultimate stop-loss
should be at the $32 area.
iShares MSCI Emerging Markets Index ETF (NYSE:
The rally in the emerging markets continues with EEM trading
at the best level since January 2013. The ETF is now up 21
percent from the early February low. It is in position to break
above the January 2013 high and trade at its best level in three
Some analysts have been calling for a pullback in the
based on valuations. While everyone is entitled to their opinion,
the numbers show the emerging markets to have lower valuation
metrics than most developed markets and are expected to grow at a
faster pace. Therefore, EEM appears to be set to break to that
new three-year high.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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