ETF Outlook for Wednesday November 13, 2013 (GLD, FXY, PGAL, GXG)
ETF Outlook for the Wednesday, November 13, 2013
SPDR Gold ETF (NYSE: GLD )
Comments from several Fed Presidents today had the market on the defensive after it appeared tapering is on the table at the December meeting. With the jobs picture still cloudy that does not appear to likely, however when a Fed President speaks, the market listens.
As the taper concerns spread through the market it held back stocks, but the real damage was it the commodities market. Oil fell to the lowest level in months and gold is closing in on a multi-month low. GLD closed down by 1.15 percent at its lowest closing price in 4 months. The Market Vectors Gold Miners ETF (NYSE: GDX ) fared even worse, with a loss of 2.1 percent and the ETF is now down 49 percent for the year.
On the flip side there is the DB Short Gold ETN (NYSE: DGZ ), which closed up 1.2 percent and matched its best intraday high in 4 months. The path of least resistance for gold is down and this is one asset class to avoid at this time.
Rydex CurrencyShares Japanese Yen ETF (NYSE: FXY )
A perfect storm for a weak Yen could be brewing again. If the Fed decides to taper in December it will boost the value of the U.S. Dollar, thus putting pressure on foreign currencies such as the Yen. The latest reports out of Japan have not been great and this is another negative for the country's currency. Finally you have PM Abe who has stated his intentions to lower the value of the Yen to fight deflation.
Put this all together and you have FXY at a new 2-month low yesterday. The ETF closed at $98.03 and if it cannot hold $97.38 it could continue to fall and retest the 2013 low of $94.38. As the Yen fall the ProShares UltraShort Yen ETF (NYSE: YCS ) breaks out to a multi-month high. The two-times inverse leveraged ETF will do the opposite of the Yen on a daily basis, multiplied by two. This is an aggressive play, but could be a winner for traders if the perfect storm his the country of the rising sun.
Global X FTSE Portugal 20 ETF ( PGAL )
The first ETF concentrating solely on Portugal will begin trading today under the symbol PGAL. The ETF is made up of 20 stocks that trade on the NYSE Euronext Lisbon exchange. Global X filed for this ETF nearly two and a half years ago and it have finally come to fruition. The country's stock market is up 15 percent this year and up over 40 percent since it hit a low in the summer of 2012. Now investors can own all the PIIGS (Portugal, Ireland, Italy, Greece, Spain) via ETFs; Portugal was the lone country without its own ETF. If the turnaround story in Europe continues it could see PGAL attracted decent assets in the next year.
Global X InterBolsa FTSE Colombia 20 ETF (NYSE: GXG )
Not an obscure ETF, but definitely one that is not on the top of many investors wishlist is GXG. The reason it is mentioned here this morning is because it is working on a 12-day losing streak. The ETF has not had an up day since 10/25. In that time GXG has lost 10.7 percent and is trading at the worst level since July.
Last week the country said it is looking for GDP growth of 3-5 percent in 2014, which is not too shabby with the current slow growth world economy. However, the country has its own issues it is dealing with that stretch from geopolitical uncertainty to a debt issue that is expanding rapidly. The reward is not the risk at current prices, but there could be a time in the future that investors take a change on Pablo Escobar's birthplace.
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