Major ETFs weakened across the board Friday as the S&P 500
snapped a five-day rally on profit-taking and disappointing
Chinese trade numbers. China's trade surplus unexpectedly fell in
July as exports barely climbed from June's levels and imports'
pace of increase slowed.
Market Overview
In afternoon trade, theSPDR S&P 500 (
SPY
) shed 0.21 to $140.31.
SPDR Dow Jones Industrial Average (
DIA
) gave back 0.25%.
PowerShares QQQ (
QQQ
), a basket of the 100 largest nonfinancial stocks on the Nasdaq,
lost 0.30%.
Ed Yardeni, president and chief investment strategist at
Yardeni Research, set his year-end target for the S&P 500 at
1450 (145 for SPY), up 3.3% from Friday's intraday level.
"Our target could easily be achieved if the European Central
Bank starts to follow through with open-ended purchases of
short-term obligations of debt-challenged eurozone governments,"
he wrote in his daily briefing. "It would also help if payroll
employment gains continue around 150,000 per month in the U.S. as
I expect. If Romney beats Obama in November, our target could
easily be surpassed."
The S&P could hit 1450 by September and 1500 (150 for
SPY), for a 7% gain by October, says Mark Arbeter, chief
technical strategist at S&P Capital IQ.
"I find it almost unprecedented to see such fear concerning
stocks and the economy, with the market well above its most
recent (June) low, and over 100% above its last bear market low
from March 2009," he wrote in his weekly technical report. "The
market doubters seem to be lurking everywhere, with consistent
calls for recessions, bear markets, and even market crashes."
Arbeter added: "This, in our view, is extremely bullish, and
will probably leave many on the sidelines shaking their heads. We
believe all the sideline money, i.e., the enormous funds in money
markets and Treasuries, is ample fuel for the stock market to
post outsized gains as rising prices force many bears to
capitulate and enter the market."
Three ETFs For A Lackluster Economy
In the face of economic uncertainties stemming from Greece,
Spain and the coming end of U.S. tax cuts, Gary Gordon, president
of Pacific Park Financial in Aliso Viejo, Calif., recommends
buying three ETFs for what he calls a "muddle-through
micro-economy."
1.Vanguard Long-Term Corporate Bond ETF (
VCLT
): In his
ETFExpert.com blog,
Gordon writes:
"VCLT tracks the Barclays 10+ Year Corporate Bond Index,
holding roughly 860+ individual bonds with an average maturity of
13-1/2 years. Recent capital appreciation has sent the annualized
yield to approximately 4.4% down from 4.7% a few months back.
That said, the reliable monthly payout and the potential for
additional price appreciation in the 'Grexit' fear-filled days of
September make VCLT worthy of buying on the dips."
2.WisdomTree Emerging Market Corporate Bond (
EMCB
):PowerShares Emerging Markets Sovereign (PCY) is one of the
largest holdings in Gordon's client portfolios because of the low
debt-to-gross domestic product ratios in emerging markets.
"Still, the same demographics, fundamentals and growth rates
that we associate with emerging-market stock assets should be an
even bigger bang for emerging-market corporate bond assets. EMCB
is expensive (0.60%), yet the dollar-denominated investment
sports an attractive 5.0% distribution yield."
3.Market Vectors Preferred Securities ex Financials (PFXF):
Gordon likes preferred stock because of their dividends but
they're often issued by volatile and risky financial companies.
PFXF offers access to preferreds without exposure to financial
stocks.
"You may still pursue the historically higher yields
associated with corporate preferred securities over those
corporations' traditional bonds, while simultaneously eliminating
the excessive volatility of the financial sector. The net expense
ratio (.40%) is reasonable for an asset that should serve up
monthly distributions at an annualized yield of 6%-6.25%," Gordon
writes.
Follow Trang Ho on Twitter
@TrangHoETFs
.