ETF Outlook for the week of October 21, 2013.
iShares 20+ Year Treasury Bond ETF (NYSE:
The September jobs report, which was delayed due to the
government shutdown, will be released Tuesday. The market expects
the number to come in around 180k, slightly higher than the
With the market pricing in a longer delay until the Fed begins
to taper, the jobs number will either reiterate that thought or
could put a damper on the bulls. As far as bonds, if the number
is inline or worse than expected TLT should continue to rise
because interest rates will likely stay low for the foreseeable
future. And vice versa.
United States Oil ETF (NYSE:
Stocks are hitting highs, bonds are increasing in value, but
oil has had trouble attracting buyers. The price of oil has
fallen as the geopolitical tensions around the world have
disappeared from the headlines and the government shutdown did
The question is whether the weakness is a buying opportunity
or a sign to stay away from the commodity. From a technical
perspective, USO has important support between $35 and $36. If
the ETF can hold the support zone it could be a buying
opportunity for investors.
iShares Dow Jones US Home Construction ETF (NYSE:
A big week for housing numbers with the existing home sales on
Monday and new home sales on Thursday will have the housing
stocks on the move. ITB is made up of about two-thirds home
builders and the remainder housing-related stocks.
A rise in mortgage rates and the government shutdown has not
been kind to the sector. That being said the ETF has held support
near $20.50 and if the numbers are strong it could lead to buyers
picking up shares on the 5-month pullback.
Rydex CurrencyShares Euro ETF (NYSE:
The euro was up one percent last week and closed 0.1 percent
below a high set in early February. A close this week above
$135.49 would put the ETF at the best level since November 2011
and would signal an important breakout.
The weakness in the U.S. dollar has had a direct affect on the
relationship with the Euro and all foreign currencies. If the Fed
continues to hold off on the taper it will be bearish for the
greenback and will help push the euro higher.
ETF of the Week - Guggenheim Timber ETF (NYSE:
A big week for the timber-related stocks pushed CUT up 3.25
percent and to the best level since December 2007. There could be
several reasons as to why the ETF outperformed the overall market
last week, but two in particular stand out. The fact the
government shutdown cost the economy $240 billion puts pressure
on the Fed to continue their accommodative policies.
The further tapering gets pushed back, the higher probability
of inflation in the near future. Timber stocks tend to do well in
inflationary environments. The second reason has to do with the
stocks hitting highs and investor confidence. This may lead to a
pickup in the housing sector which would result in more demand
Technically the stock is very bullish, however waiting for a
pullback to $25.00 would be the best strategy versus chasing a
new multi-year high.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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