Outlook for the Week of July 21, 2014
Last week geopolitical unrest around the globe threatened the
bull market. The Malaysian Airline shooting and the Israeli
ground attack on Gaza spooked markets and sent the SPDR S&P
500 ETF (NYSE:
) down more than one percent for the first time in more than
The ETF snapped back with a one percent gain on Friday and
closed out the week down 0.25 percent from an all-time closing
iShares MSCI UAE Capped ETF (NASDAQ:
The Dubai stock market got hammered on Sunday, falling six
percent in one day. This is the worst one-day fall since June 24
when the Dubai FMG Index lost 6.5 percent. A large construction
firm, Arabtec Holding Company, led the market lower in both
The ETF suffered a 20 percent pullback in June before rallying
16 percent in July through Friday's close. The long-term outlook
for the country and the region remain high, but investors must be
prepared for high volatility from week to week.
Sell Off Creates ETF Buying Opportunity
iPath S&P 500 VIX Short-Term Futures ETF (NYSE:
The heavily traded ETF (44.3 million shares on Friday) spiked
on Thursday by 9.8 percent as the CBOE Volatility Index (
) exploded for a gain of 32 percent. As the fear level eased
Friday the ETF fell by 6.8 percent and ended the week with a loss
of 1.45 percent. The trend for VXX has been down for years, and
investors should not look at this product as a way to hedge
against a sell off.
Since the beginning of 2012 the ETF is down 95 percent. There
will be days when the VIX spikes but all investors, sans day
traders, should not rely on gambling on the appropriate
SPDR Technology ETF (NYSE:
The technology sector received a mention in Barron's this
weekend about the valuation. Barron's noted that the
sector's price-to-earnings ratio and price-to-cash flow ratio are
at the lowest level in 25 years relative to the S&P 500. This
suggests the technology sector should outperform the overall
market in the future.
XLK has had a solid year, up 10.4 percent and within a few
pennies of a new 12-year high. Investors could use the ETF along
with some of its peers to gain access to the entire sector.
© 2014 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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