ETF Outlook for Tuesday, May 13, 2014:
Rydex CurrencyShares Euro ETF (NYSE: FXE )
The value of the euro continues its weeklong slide after worse than expected economic data out of Germany. The data opened the door to more stimulus in Europe just a little more and that has traders selling the euro in favor of the U.S. dollar.
FXE closed at the lowest level in five weeks on Monday and the level to watch this morning is $135.31; a close below there would signal a more significant technical breakdown.
PowerShares Dynamic Media ETF (NYSE: PBS )
The ETF's largest holding is on the move Tuesday morning after new that it may be the target of a takeover by AT&T (NYSE: T ). DirecTV (NYSE: DTV ) is rally five percent this morning after the news hit the wires after the trading bell closed Monday night.
According to Bloomberg, AT&T is considering offering $100 per share for DTV, which closed Monday at $87.16 per share. With DTV making up 6.2 percent of the ETF and close competitor Dish Network (NASDAQ: DISH ) making up another 5.7 percent, PBS should open significantly higher this morning and could see a sustained rally if the deal is complete.
iShares Dow Jones Transportation Average ETF (NYSE: IYT )
Joining the Dow Jones Industrial Average and the S&P 500 at new all-time highs was the transportation stocks on Monday. The ETF closed up an impressive 1.9 percent as it was fueled by big moves in the airlines stocks including Jetblue Airways (NASDAQ: JBLU ), United Continental Holdings (NYSE: UAL ), and Alaska Air Group (NYSE: ALK ).
All three stocks gained at least 3.4 percent with ALK hitting a fresh all-time high. Another sector that is represented in the ETF is the railroads, which also hit a new all-time high yesterday. From top to bottom the transports appear to be one of the strongest sectors in the market.
iShares MSCI Peru Capped Index ETF (NYSE: EPU )
The ETF has been in a trading range between $31 and $34 for the last six months and over the last two trading days the ETF broke out above resistance for the first time. On Monday, EPU closed the day at $35.32, up 2.1 percent on the biggest volume in over a month.
The country known for its natural resources and that is why 45 percent of the ETF is invested in the materials stocks, followed by 34 percent in the financials. The largest holding, which makes up 27 percent of the ETF, is Creditcorp (NYSE: BAP ). The stock is up 20 percent year-to-date and is close to breaking out to a new all-time high.
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