|ETF Global Opportunities
Weekly analysis on US stocks, sectors, commodities and global indices.
26 April 2016
The bulls minus bears spread on our Advisors Sentiment Survey is now trading in the middle of its 5 year range. That is not a broad market sell signal but it does mean investors need to be more selective with regard to buying equity ETFs.
At the January and February lows all boats were lifted but now some areas will naturally begin to lag and underperform. Today we highlight some funds where caution may be necessary, international equity funds such as Germany and Hong Kong, plus the Emerging market fund.
This Week's Trades
- Homebuilders - shorting
- Sugar - buying
Note - Trades will be executed on today's close.
Other ETF Highlights
- Dow Jones Industrials - buy
- Materials - buy
- Utilities - sell
- Germany - relative sell
- Hong Kong - relative sell
- Emerging Markets - relative sell
- Brazilian Real - buy
- US 20+ years Bond - sell reiterated
US Equity Indices
The Dow Jones Industrials fund maintains its uptrend off the January low, working its way towards the record high from the first half of 2015. The 14-day RSI is not overbought due to the steady nature of the advance. Weakness along the way is proving to be long entry opportunities.
US Sector Indices
The P&F price and relative charts for the Materials sector ETF continue their 2016 recoveries. The price is testing February 2015 trendline resistance and breaking through would open up an extension to new all-time highs.
The Homebuilders fund is running into resistance from the October through December consolidation band. The 14-day RSI appears to be rolling over, a sign of possible impending price weakness.
We shall open a short in the XHB this afternoon. The trade would be exited should the price break up through $37.
The Utilities ETF has failed at its early 2015 peak, with a brief bull-trap breakout of that level earlier this month. The price could potentially work its way down to the 2015 lows over the next several months.
The P&F relative chart has rolled over from trendline resistance dating back to 2008, a strong technical reason alone to avoid longs.
Other Developed Indices
The Germany Index ETF is encountering resistance from its November/December 2015 highs. With momentum, the 14-day RSI, turning down from overbought, the fund may be entering a corrective phase.
The P&F relative chart, versus U.S. equities, sits at a decade low, a good reason to avoid longs for the time being.
The Hong Kong fund is also nearing potential resistance, the peak from the October 2015 oversold bounce. The 14-day RSI is developing a small bearish divergence. Until there is a decisive break of that $21 level, longs should be avoided. The P&F relative chart has been trending lower since 2011.
The Emerging Markets fund is nearing its peak from October 2015, a potential resistance level. Trading is above the 200-day exponential moving average but the MACD exhibits a small bearish divergence. The price chart is vulnerable here and with the P&F relative chart, versus the U.S. equity market, at a long-term low, we would continue to avoid.
The Brazilian Real ETF is channeling higher off its January low. That rise has cleared the 200-day exponential moving average and that is now support. The back and forth action has resulted in a comfortable momentum condition. With the 14-day RSI being just above neutral, the uptrend should soon resume.
The Sugar fund has developed a rising trend off the August 2015 low. Support has been found from the 200-day exponential moving average, a line which is turning up following a flattening out process. The 14-day RSI has just turned up from neutral and that should allow new 52-week price highs soon.
We shall enter a long position in the SGG on the close today and would consider exiting should the price deteriorate beneath $32.
The US 20+ years Bond fund is testing its lows from March. Breaking down through them would activate a top formation.
The P&F relative chart exhibits poor performance since February. We reiterate our sell advice.
ETF Trading (Long/Short) Longs
|Date||Stock||Code||Type||Open Price||Current Price||% P&L|
|27 Aug 2015||PowerShares QQQ||QQQ||Long||105.64||108.98||+3.16%|
|3 Sep 2015||SPDR Sector Trst Technology||XLK||Long||39.91||43.45||+8.87%|
|3 Nov 2015||iShares Japan Index||EWJ||Long||12.4||12.13||-2.18%|
|22 Dec 2015||SPDR Consumer Staples||XLP||Long||50.55||52.32||+3.50%|
|30 Dec 2015||iShares DJ US Medical Devices Fund||IHI||Long||123.56||129.5||+4.81%|
|10 Feb 2016||Diamond Trust- 1/100 DJIA||DIA||Long||159.39||179.54||+12.64%|
|17 Feb 2016||PowerShares Aerospace & Defense||PPA||Long||32.89||36.05||+9.61%|
|2 Mar 2016||Market Vectors Russia ETF||RSX||Long||15.12||17.23||+13.96%|
|17 Mar 2016||SPDR S&P Metals and Mining ETF||XME||Long||20.73||22.56||+8.83%|
|17 Mar 2016||CurrencyShares Canadian Dollar Trust||FXC||Long||76.3||78.11||+2.37%|
|17 Mar 2016||United States Oil Fund||USO||Long||10.55||10.55||0.00%|
|22 Mar 2016||DJ US Pharmaceuticals Index Fund||IHE||Long||138.19||146.02||+5.67%|
|29 Mar 2016||SPDR Consumer Discretionary||XLY||Long||78.69||79.55||+1.09%|
|29 Mar 2016||iShares DJ Transportation Average||IYT||Long||142.47||143.21||+0.52%|
|5 Apr 2016||iShares Nasdaq Biotechnology||IBB||Long||269.64||285.95||+6.05%|
|5 Apr 2016||SPDR Sector Trst Health Care||XLV||Long||68.47||71.59||+4.56%|
|12 Apr 2016||SPDR Sector Trst Energy||XLE||Long||63.96||66.29||+3.64%|
|12 Apr 2016||iShares Brazil Index||EWZ||Long||28.1||27.66||-1.57%|
|21 Apr 2016||SPDR Sector Trst Financial||XLF||Long||23.33||23.5||+0.73%|
|21 Apr 2016||SPDR Sector Trst Industrial||XLI||Long||56.27||56.14||-0.23%|
|21 Apr 2016||Base Metals||DBB||Long||12.97||12.94||-0.23%|
ETF Trading (Long/Short) Shorts
|Date||Stock||Code||Type||Open Price||Current Price||% P&L|
|3 Feb 2016||Natural Gas||UNG||Short||7.55||7.09||+6.09%|
|3 Feb 2016||US 20+yrs||TLT||Short||127.95||127.83||+0.09%|
|5 Apr 2016||Livestock||COW||Short||23.54||23.0166||+2.22%|
Copyright 2016 by Stockcube Research Ltd.