|ETF Global Opportunities
Weekly analysis on US stocks, sectors, commodities and global indices.
29 October 2014
We last covered our short-term-composite two weeks ago and then we noted "The market remains deeply oversold and vulnerable to an oversold bounce. Our short-term-composite has been building a base for the past couple of weeks and the longer it does that, the larger the subsequent snap-back should be". That snap-back is certainly now in full swing and with the indicator only just above neutral, the potential is there for further strength by the equity funds over the next couple of weeks.
Today we cover an equity short, open an emerging market long and short a bond ETF.
This Week's Trades
- Bank (KBE) - covering short
- China 25 Index Fund (FXI) - buying, stoploss at $36
- Australian Dollar (FXA) - buying, stoploss at $86
- US 20+ years (TLT) - shorting, stoploss at $129
Note - Trades will be executed on today's close.
Other ETF Highlights
US Equity Indices
- DJ Select Dividend Index (DVY) - buy
- Russell 2000 (IWM) - buy reiterated
US Sector Indices
- Software Index Fund (IGV) - buy
- Energy (XLE) - buy
- Oil & Gas Exploration Production (XOP) - buy
- Metals & Mining (XME) - trading buy
- see trades
- Gold (GLD) - sell
- see trades
US Equity Indices
The DJ Select Dividend Index (DVY) is resuming its long-term uptrend following a bear-trap break of its 200-day exponential moving average. With the MACD only just turning up from oversold, there is a strong likelihood that the DVY will breakout to new all-time highs over the next few weeks.
The Russell 2000 (IWM) index outperformed Tuesday, rising by 2.8%. That strength enabled two boxes to be filled to the upside, potentially resuming the long-term uptrend. With conditions not being overbought, a push to record highs is expected.
US Sector Indices
The Bank (KBE) fund has recovered sharply the past three weeks and trading now looks to be close to regaining support from the 200-day exponential moving average. The primary uptrend is likely reasserting and we shall cover our short position on the close today.
The Software Index Fund (IGV) is resuming its four year uptrend channel following this month's correction. With momentum not yet overbought, an extension to record highs is expected.
The sell-off in the Energy (XLE) ETF looks complete following the sharp reversal off the low of three weeks ago. The MACD is down to the same oversold low from where the index reasserted from in 2011. Investment longs entered here could use this month's low of $77.51 as a stoploss. Present yield is 1.96%.
The Oil & Gas Exploration Production (XOP) fund has been developing small bases on its price and relative charts over the past few weeks. Closing above $62.50 would confirm those bottoms and imply outperformance, possibly into yearend.
The Metals & Mining (XME) fund has reversed up the past week on its P&F chart, finding support from its June low. Potential for a trading bounce back up towards the August high at $44. Ideally the relative chart needs to also show improvement to warrant anything more than short-term positions.
The China 25 Index Fund (FXI) is attempting to resume its price and relative uptrends off the March lows. The 14-day RSI is favorable as it rises through neutral.
We shall open a long in the FXI on the close this afternoon, placing a stop just under the recent lows, at $36. The trade aims for a push up towards $43.
The Australian Dollar (FXA) is developing a small base at support drawn across from its late January bottom. The price could now embark on a rally back towards the top end of the 2014 range at $95. The MACD momentum indicator is rising with ample room to climb further.
We shall open a long in the FXA on the close today. The stoploss will be at $86.
The Gold (GLD) ETF is deteriorating again and is very close to new five year relative lows against the equity market. The price is steadily trending lower and conditions are not oversold. A break of the 2013 and 2014 price lows is expected soon.
The US 20+ years (TLT) fund continues to weaken following capitulation on the 15th October. The price looks to be heading down towards 2014 uptrend support around $113.
The P&F relative chart, versus the S&P 500, is also showing poor action as it potentially reasserts its long-term downtrend.
We shall open a short in the TLT on the close today. The stoploss will be at $129, just above the recent price spike.
ETF Trading (Long/Short) Longs
Stop 29 Jan 2014
iShares S&P National Municipal Bond Fund
107.25 6 Aug 2014
SPDR Consumer Staples
42 7 Oct 2014
iPath MSCI India Index ETN
66 16 Oct 2014
ISHS Russell 2000 Index
102 16 Oct 2014
iShares DJ Transportation Average
136 16 Oct 2014
iShares Hong Kong Index
17.50 20 Oct 2014
iShares United Kingdom Index
Stop 2 Jul 2014
28.50 9 Jul 2014
streetTRACKS KBW Bank ETF
34.25 1 Oct 2014
WisdomTree Dreyfus Brazilian Real Fund
Closure of positions – The Analyst may close a position to take profits or exit early to prevent a loss if the outlook has changed. Positions will only be closed if there has been prior mention in the newsletter. The closing price will be at the next close following the report.
Stops – Stop levels are given for each model portfolio position.
Copyright 2014 by Stockcube Research Ltd.