ETF Outlook for Thursday, January 16, 2014
SPDR Financial ETF (NYSE: XLF )
Solid earnings from Bank of America (NYSE: BAC ) yesterday and similar results from JPMorgan Chase (NYSE: JPM )and Wells Fargo (NYSE: WFC ) a day earlier sent shares of XLF to the best level in over five years.
With more financial stocks set to report in the next two days, the sector should remain in focus and XLF will be one of the more heavily traded ETFs. Yesterday the ETF traded 61.7 million shares, the most since December, as it gained 1.2 percent.
First Trust ISE Cloud Computing ETF (NYSE: SKYY )
After consolidating for nearly a month the niche technology ETF finally broke out yesterday on its biggest volume in the last 12 months. Several stocks in the top ten holdings that had big days fueled the rally. They include Aruba Networks (NASDAQ: ARUN ), F5 Networks (NASDAQ: FFIV ), and NetSuite (NYSE: N ).
All three stocks gained at least 3 percent and SKYY finished the session with a gain of 1.5 percent. The next few days will be critical for the ETF from a technical perspective. If the ETF can hold above the breakout level of $26.60 it will confirm a new leg higher and signal a buying opportunity.
Global X Lithium ETF (NYSE: LIT )
A once hot ETF that has fallen out of favor with investors the last few years has started to gain some attention once again. The ETF closed higher by 2.3 percent yesterday on double the average volume as its top three holdings rallied. The top three holdings are the three largest producers of lithium in the world and account for 46 percent of the portfolio.
FMC Corp (NYSE: FMC ), Rockwood Holdings (NYSE: ROC ), and Chemical & Mining Company of Chile (NYSE: SQM ) all had big days yesterday. FMC and ROC both gained over 2 percent and close at new all-time highs. SQM, which has been lagged its peers broke out with a gain of 7.4 percent. The breakout and big volume could begin to attract investors again and LIT could be a contrarian ETF to watch in 2014.
WisdomTree Middle East Dividend ETF (NYSE: GULF )
This Gulf Region concentrated ETF has quietly been putting together a big rally as investors continue to ignore the region. GULF closed higher by 0.8 percent yesterday to finish the day at the best level in over five years. Over the last twelve months the ETF is up 35 percent, beating the return of the S&P 500.
The top three countries, which make up 73 percent of the portfolio, are Qatar, U.A.E., and Kuwait. Most investors think oil and energy stocks, when in reality the big companies in the region are the financials that make up 58 percent of the ETF. Qatar had a positive mention in an article this week as one of the best places to invest for the next ten years and based on the potential for the region and the country that predication could be true.
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