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ETF Global Opportunities
Weekly analysis on US stocks, sectors, commodities and global indices.
25 June 2014
     

Market Overview

 

Our short-term-composite has recovered to test the high from earlier this month at 74%. With yesterday's equity market weakness, a small consolidation is occurring at that high and that is bullish, providing there is no immediate breakdown. The indicator still holds the potential to visit the end of 2013 peak at 82%.

With the general market uptrend still underway, today we add longs in charts exhibiting healthy reassertions.

 

 


This Week's Trades

  • Utilities (XLU) - buying, stoploss at $41.50
  • France Index (EWQ) - buying, stoploss at $29.50
  • Gold (GLD) - buying, stoploss at $121.55
  • Emerging Markets Bond (EMB) - buying, stoploss at $113.50
  • Technology (XLK) - stoploss raised to $37.75

Note - Trades will be executed on today's close.


Other ETF Highlights

 

US Equity Indices

  • S&P 500 (SPY) - buy

US Sector Indices

  • Consumer Staples (XLP) - buy
  • Gold Miners (GDX) - buy

Other Developed Indices

  • South Korea Index (EWY) - buy

Currencies

  • Swiss Franc Trust (FXF) - buy

Commodities

  • see trades

Bonds

  • U.S. Investment Grade (LQD) - buy reiterated
  • 7-10 year T-Bond Fund (IEF) - buy


Analysis

 

US Equity Indices

 

A small set-back for the S&P 500 (SPY) ETF yesterday but the uptrend still stands. Yesterday's drop and slight weakness at the open this morning effectively tested the 20-day exponential moving average, a line which has provided support since April. Momentum is not overbought, so a reassertion to new highs looks likely from here.

 

 

US Sector Indices

 

The Consumer Staples (XLP) fund has pulled back over the past four sessions to test its four month uptrend. With momentum, the 14-day RSI, down to neutral, we would expect an imminent reassertion from here.

 

 

The Utilities (XLU) fund maintains its price and relative rallies off the lows of three weeks ago. Pull-backs are finding support from the rising 50-day exponential moving average and that can be used as a stoploss. The present yield is 3.44%.

We shall buy the XLU today. The stoploss will be at $41.50.

 

 

 

The Gold Miners (GDX) fund has reversed up the past week, forming a higher low compared to that of December. Like the GLD chart highlighted below, a potential base is taking shape.

Longs are worth considering, placing a stop just under the May low of $21.93. The most logical upside target is falling trendline resistance at $39.

 

 

The Technology (XLK) fund maintains its steady uptrend with support being provided by the 50-day exponential moving average.

Momentum has unwound with the consolidation of the past few weeks and that will allow for an eventual reassertion higher.

The stoploss on our long position is raised to $37.75.

 

 

Other Developed Indices

 

The France Index (EWQ) ETF has retreated to support from its 50-day exponential moving average. Momentum, the 14-day RSI, is well positioned to allow a reassertion higher from here.

The fund is down slightly today and we shall buy into that weakness. Our stoploss will be at $29.50.

 

 

The South Korea Index (EWY) fund jumped 1.1% yesterday, outperforming the U.S. equity market. The fund has traded sideways to down since the start of the month and that has enabled momentum to settle back. A push to new 52-week highs is expected over the next few weeks.

 

 

 

Currencies

 

The Swiss Franc Trust (FXF) is a good reassertion candidate as trading consolidates across the 200-day exponential moving average. The MACD is slowly turning up from an oversold level, suggesting a reassertion is imminent.

 

 

Commodities

 

The P&F price chart for Gold (GLD) has reversed back to the upside over the past week. That action resumes the potential base development of the past year.

A rally is commencing towards the top of the yearlong range at $132 and breaking through that would activate the bottom.

We shall buy the GLD on the close today. The stoploss will be at $121.55.

 

 

Bonds

 

The Emerging Markets Bond (EMB) rose 0.4% yesterday with some further strength today. The 2014 price uptrend is reasserting and that should continue given the favorable momentum condition. A base is developing against the S&P 500.

We shall buy the EMB on the close today. The stoploss will be at $113.50.

 

 

The U.S. Investment Grade (LQD) started to move up and away from its supporting 50-day exponential moving average yesterday. The 14-day RSI is in an excellent position as it rises through neutral. The nine month uptrend looks to be resuming.

 

 

The 7-10 year T-Bond Fund (IEF) is another reassertion candidate. Support is being provided by both the 50-day and 200-day exponential moving averages. Momentum is at neutral, providing plenty of upside potential.

 

 

 

MODEL PORTFOLIO

ETF Trading (Long/Short) Longs

Date Stock Code Type Open Price Current Price % P&L Stop
29 Jan 2014 iShares S&P National Municipal Bond Fund MUB Long 106.11 108.15 +1.92% 107.25
19 Feb 2014 iPath Sugar ETN SGG Long 55.84 56.77 +1.67% 51
19 Feb 2014 US Investment Grade Crp LQD Long 116.33 119.05 +2.34% 117.75
26 Mar 2014 US High Yield HYG Long 94.23 95.24 +1.07% 93
9 Apr 2014 CurrencyShares British Pound Sterling Trust FXB Long 165.31 167.1 +1.08% 162
16 Apr 2014 SPDR Sector Trst Health Care XLV Long 56.9 60.49 +6.31% 59.25
30 Apr 2014 DJ US Pharmaceuticals Index Fund IHE Long 129.28 134.742 +4.22% 123
30 Apr 2014 SPDR Sector Trst Technology XLK Long 36.45 38 +4.25% 37.75
21 May 2014 United States Natural Gas Fund UNG Long 24.78 25.06 +1.13% 23.25
18 Jun 2014 DJ US Regional Banks Index Fund IAT Long 34.73 34.39 -0.98% 33.75
18 Jun 2014 iPath MSCI India Index ETN INP Long 68.9431 68.22 -1.05% 64.50
ETF Trading (Long/Short) Shorts
Date Stock Code Type Open Price Current Price % P&L Stop
21 May 2014 iShares Brazil Index EWZ Short 48.03 49.27 -2.58% 51

 

Model Portfolio Rules
Allocation – The maximum number of trades is limited to 20 (including longs and shorts).
 
Opening of positions – Positions are opened at the immediate close following the report, using the closing price.  
 

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.

 
Note - When positions are stopped/closed out they will not appear as closures immediately but we plan to update the portfolio table with in 24 hours.
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