|ETF Global Opportunities
Weekly analysis on US stocks, sectors, commodities and global indices.
23 July 2014
Our short-term-composite is turning up from beneath neutral and has the potential to rally from here. That would coincide with strength on the U.S. equity markets but it is difficult to see the move lasting into next week as red flags remain raised elsewhere. We mentioned the sentiment situation last week. Highlighted today is the underperformance by the small cap ETF, an area which typically leads.
This week we open shorts in the underperforming U.S. industrial sector plus the U.S. small-caps. We buy two international funds, Hong Kong and the Japanese Small Cap dividend ETF.
This Week's Trades
- Russell 2000 Index (IWM) - shorting, stoploss at $119
- Industrials (XLI) - shorting, stoploss at $55.25
- Hong Kong (EWH) - buying, stoploss at $20.75
- Japan Smallcap Dividend Fund (DFJ) - buying, stoploss at $52
Note - Trades will be executed on today's close.
Other ETF Highlights
US Equity Indices
- S&P 500 (SPY) - sell into strength
US Sector Indices
- Biotechnology (IBB) - short-term trading buy
- Oil Service (OIH) - short-term trading buy
- Social Media Index (SOCL) - short-term trading buy
Other Developed Indices
- see trades
- Emerging Markets (EEM) - buy
- Emerging Asia Pacific (GMF) - buy
- Canadian Dollar Trust (FXC) - buy
- US Natural Gas Fund (UNG) - sell
- US 20+ years (TLT) - buy
US Equity Indices
The S&P 500 (SPY) is making new highs but internals remain a concern. The percentage of S&P 500 stocks trading above their 30-week moving average still shows a bearish divergence, peaking earlier this month. A visit to the 50-day exponential moving average at $194 is overdue. Therefore caution is still called for with respect to this fund.
The Russell 2000 Index (IWM) ETF continues to underperform. The price and relative charts are both in correction mode. We would continue to avoid longs here.
The fund is up slightly today and we shall go short on that strength. Our stoploss will be at $119.
US Sector Indices
The Biotechnology (IBB) fund was up decently yesterday and is up a further 1.8% this afternoon. The uptrend off the April low is reasserting and heading towards the peak from February. The 14-day RSI is well positioned to allow that strength. Outperformance set to continue.
The Oil Service (OIH) fund is resuming its price and relative uptrends off the February lows. Conditions are not overstretched in anyway, with the 14-day RSI rising from neutral. Record price highs expected over the near-term.
The Social Media Index (SOCL) is attempting to resume its price and relative uptrends off the May lows. Momentum, the 14-day RSI, is at a good level to allow further short-term strength.
The Industrials (XLI) sector fund has underperformed since the start of June. The price has drifted lower over that period and could go lower as conditions are not oversold.
The fund is an underperformer and we shall short this afternoon. We aim for a test of $52 and shall place a stoploss at $55.25.
Other Developed Indices
The Hong Kong (EWH) fund made a new 52-week high intraday yesterday. The 14-day RSI has only just risen through neutral, so strength should continue. The fund offers a yield of 3.45%.
We shall buy the EWH on the close today. The stoploss will be at $20.75.
The Japan Smallcap Dividend Fund (DFJ) is pushing towards record highs and conditions are not overbought. The fund has shown outperformance since March and that is resuming. Current yield is 1.65%.
We shall open a long in the DFJ today with a stoploss at $52.
The Emerging Markets (EEM) fund is heading towards its peak from the start of 2013 at $45.33. A test of that peak looks possible over the next few weeks as momentum is not overbought.
The Emerging Asia Pacific (GMF) fund rose over 1% yesterday with upside follow-through today. Yesterday's move advanced the P&F price chart by a box. A small 2014 base has confirmed on the P&F relative chart, implying further outperformance over the short-term.
The Canadian Dollar Trust (FXC) maintains its uptrend off the March low. Support is being provided by the rising 50-day exponential moving average. Momentum is in a good field position to allow a reassertion from here.
The US Natural Gas Fund (UNG) was weak yesterday and is in the red again today. The drop yesterday was enough to fill a box to the downside and test rising trendline support off the November 2013 low.
With the long-term price and relative trends down, we would see any bounces as a selling opportunity.
The US 20+ years (TLT) has strengthened the past week, with upside movement on both the price and relative P&F charts. The price has reasserted its 2014 uptrend to new highs and the relative chart has found support from January. Present yield is 2.98%.
ETF Trading (Long/Short) Longs
Stop 29 Jan 2014
iShares S&P National Municipal Bond Fund
107.25 9 Apr 2014
CurrencyShares British Pound Sterling Trust
162 16 Apr 2014
SPDR Sector Trst Health Care
60.25 30 Apr 2014
SPDR Sector Trst Technology
37.75 18 Jun 2014
iPath MSCI India Index ETN
64.50 25 Jun 2014
SPDR Sector Trst Utilities
41.50 25 Jun 2014
121.55 25 Jun 2014
Emerging Markets Bond
Stop 2 Jul 2014
Powershares DB Agriculture Fund
28.50 9 Jul 2014
iShares Dow Jones US Aerospace & Defense Index Fund
109.60 9 Jul 2014
streetTRACKS KBW Bank ETF
34.25 9 Jul 2014
iShares DJ US Broker-Dealers Index Fund
38.50 16 Jul 2014
SPDR Consumer Discretionary
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.