Government Shutdown Continues
The market rallied to end the week on hopes of an imminent
deal. As of Sunday morning there was no deal struck yet and it
appears the government shutdown may continue into the new week.
There is no doubt the shutdown has an affect on the stock
When the news is positive the money flows into stocks. When
the headlines point to the shutdown dragging on it sends
investors to the sidelines
An ETN that gauges fear in the market is the iPath S&P 500
VIX Short-Term Futures ETN (NYSE:
). The ETN fell 14 percent the last three days of the week,
suggesting a deal was in the books to raise the debt ceiling.
Unfortunately for the market and all Americans, the bozos in
D.C. have yet to agree on a deal and with stocks set to open
lower on Monday morning expect VXX to be higher.
Charting the S&P 500
The best day of the year for the markets last Thursday was
enough to help the S&P 500 close out the week with a gain of
0.75 percent. This after the index fell by over two percent to
begin the week.
With the index sitting at the best close since Seotember 20 it
would appear to be ready to retest the all-time high set last
month. Well, investors better hold their horses; the lack of a
deal in D.C. this weekend has the futures trading lower on Sunday
night by nearly one percent.
The chart of the S&P 500 over the last six months shows a
very distinct pattern.
The parallel black lines that encompass the chart are the
upper and lower lines for the uptrend channel the index has been
Last week the, index came down and tested the support before
rallying. If the trend continues the next target for the S&P
500 will be the 1760-1770 area, a new all-time high.
Ireland is prepared to become the first country in the
Eurozone to exit their bailout program on December 15. This is
not a major surprise as the country as been moving in the right
direction for the last few years.
However, the actual announcement shows how far Ireland has
come since the bailout occurred. The iShares MSCI Ireland Capped
) is up 32 percent in 2013 and is trading near its best level
since it began trading in May 2010.
Earnings Season in Full Swing
A swath of earnings from companies will be hitting the wires
this week and along with the situation in D.C., they will be the
biggest driver of the market.
The financial stocks kicked things off last week and more will
be reporting in the next few days, led by Bank of America (NYSE:
). The SDPR Financial ETF (NYSE:
) has been moving in lockstep with the overall market and will
likely be the driver of next potential breakout. If the
financials disappoint, expect it to hold the market back and take
ETF of the Week - EUFN
Investing in Europe remains very risky in the minds of most
investors. Narrow it down to the financial stocks in the region
and the perceived risk increases dramatically. This misconception
of the European financials has investors missing out on a big
The iShares MSCI Europe Financials (NYSE:
) is having a solid year, up 20 percent. But, there could be much
more on the upside as long as the global economy continues to
The ETF is heavily invested in the U.K., France, Switzerland,
Spain, and Germany. The largest holding is HSBC Holdings (NYSE:
), a U.K.-based bank that makes up 11 percent of the ETF. The
thesis behind owning EUFN is that the banking system in Europe
will continue to improve and that the low valuation versus their
U.S. peers will come back inline.
The ETF was up two percent last week and closed at the best
level since May 2013. Support is at $22.75 and near-term
resistance is $25.12.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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