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ETF Global Opportunities
Weekly analysis on US stocks, sectors, commodities and global indices.
22 April 2015
     

Market Overview

The sideways range on the S&P 500 and major index ETFs is testing nerves, causing impatient investors to bail out. That point is depicted by the number of bullish advisors in our Advisors Sentiment Survey retreating back to the 50% region. Previous pull-backs to that level have been followed by the market resuming to the upside. Given that and evidence elsewhere, such as the non-overbought condition discussed last week, we remain net long equity funds.

Today we exit bond fund longs which are underperforming the equity market. We buy a biotech fund as that area resumes its upward trajectory.

 

 

 

 


 

This Week's Trades

  • Biotechnology (IBB) - buying, stoploss at $345
  • US 20+ year Bond (TLT) - closing long
  • 7-10 year T-bond Fund (IEF) - closing long

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

 


 

Other ETF Highlights

 

US Equity Indices

  •  NASDAQ 100 (QQQ) - buy reiterated

US Sector Indices

  • Health Care (XLV)- buy reiterated
  • Health Care Providers (IHF) - buy

Other Developed Indices

  • Japan (EWJ) - trading buy
  • Germany Index (EWG) - buy

Emerging Indices

  • Russia ETF (RSX) - watch to buy

Currencies

  • US Dollar Index Bullish (UUP) - wait for directional break

Commodities

  • Sugar (SGG) - sell

Bonds

  •  see trades

 


 

Analysis

 

US Equity Indices

 

The NASDAQ 100 (QQQ) fund has been strong this week, outperforming. The P&F price chart reversed up Monday, with some follow through yesterday. The long-term uptrend looks to be reasserting.

We reiterate our buy advice.

 

 

 

US Sector Indices

 

Price and relative charts for the Biotechnology (IBB) fund continue to firm up following the March correction. The P&F relative chart, versus the S&P 500, reversed up yesterday, to resume its long-term uptrend.

New price and relative highs are imminent as conditions are not overbought thanks to the recent pull-back.

We shall open a long in the IBB on the close today. The stoploss will be at $345.

 

 

 

The price and relative uptrends for the Health Care (XLV) fund are also reasserting. The 14-RSI is rising yet not overbought. The 50-day exponential moving average is providing support.

We reiterate our buy advice.

 

 

 

The Health Care Providers (IHF) fund has consolidated in a tight range since its record high in the second half of March. The pause is allowing the moving averages to catch up with the price and momentum to settle. Watch for an eventual resumption higher.

 

 

Other Developed Indices

The Japan (EWJ) ETF has rallied to new five year price highs the past week. The next upside level to watch is the $14 region, last visited in 2008.

Recent outperformance enabled the P&F relative chart to reverse up yesterday; though the long-term trend still remains down.

 

 

 

 

The Germany Index (EWG) looks to be resuming its medium-term price uptrend. Momentum should allow for that to continue as the 14-day RSI is not overbought.

Decent outperformance versus the U.S. equity market since the start of the year.

 

 

Emerging Indices

 

The Russia ETF (RSX) is consolidating just beneath trendline resistance dating back to 2013. Breaking through that line would signal the end of the four year price downtrend.

The P&F relative chart shows outperformance since the start of the year, although the primary trend has been down since 2011 (the reason as to why we are not buying just yet).

 

 

 

 

Currencies

 

The US Dollar Index Bullish (UUP) ETF continues to trade its sideways range which started in mid-March. The chart is no longer overbought. It remains unclear as to whether the range is a top or bullish consolidation. We wait for directional cue.

 

 

 

Commodities

 

The MACD has turned down from neutral and offers plenty of downside scope. The Sugar (SGG) fund is resuming price and relative downtrends following an oversold bounce into its 50-day exponential moving average.

Record price and relative lows expected over the near-term (fund listed in 2008). 

 

 

 

Bonds

 

The US 20+ year Bond (TLT) looks to be rolling over on a price and relative basis following a failure to achieve the peak from the end of January. Potential for a return towards the March low over the next few weeks.

We shall exit our long in the TLT on the close today. 

 

 

 

The 7-10 year T-bond Fund (IEF) is also struggling to resume its rally off the early March low. Price action is turning down, falling short of the peak from January. The MACD will also print a bearish cross-over with today's weakness (down 0.5% at the time of writing).

Our long in the IEF will also be closed out this afternoon.

 

MODEL PORTFOLIO

ETF Trading (Long/Short) Longs

Date Stock Code Type Open Price Current Price % P&L Stop
19 Nov 2014 DJ US Pharmaceuticals Index Fund IHE Long 147.52 178.84 +21.23% 166.50
3 Dec 2014 SPDR Sector Trst Utilities XLU Long 46.27 44.36 -4.13% 43
10 Feb 2015 SPDR Sector Trst Health Care XLV Long 70.12 74.23 +5.86% 66.50
18 Mar 2015 Gold GLD Long 112.37 115.38 +2.68% 109
18 Mar 2015 US 20+yrs TLT Long 131.49 129.7 -1.36% 120
24 Mar 2015 SPDR Consumer Staples XLP Long 48.74 49.32 +1.19% 47.75
24 Mar 2015 iShares South Korea Index EWY Long 58.08 61.44 +5.79% 56
24 Mar 2015 CurrencyShares Swiss Franc Trust FXF Long 101.73 101.93 +0.20% 97
24 Mar 2015 iShares 7-10 yr T-Bond Fund IEF Long 108.78 108.55 -0.21% 107
1 Apr 2015 ISHS Russell 2000 Index IWM Long 124.42 125.52 +0.88% 121
1 Apr 2015 SPDR Sector Trst Energy XLE Long 77.56 81.79 +5.45% 72.50
8 Apr 2015 PowerShares QQQ QQQ Long 106.64 108.06 +1.33% 103.50
8 Apr 2015 iShares Australia Index EWA Long 23.56 23.17 -1.66% 22.10
15 Apr 2015 Oil Service HOLDRS OIH Long 38.48 36.5 -5.15% 35
15 Apr 2015 iShares DJ Transportation Average IYT Long 155.8 157.77 +1.26% 151
15 Apr 2015 iShares S&P Europe 350 Index IEV Long 45.95 45.81 -0.30% 43.75
15 Apr 2015 iShares Canada Index EWC Long 29.03 28.88 -0.52% 27.25
15 Apr 2015 United States Oil Fund USO Long 19.71 19.45 -1.32% 17.50

ETF Trading (Long/Short) Shorts

Date Stock Code Type Open Price Current Price % P&L Stop
2 Jul 2014 Agriculture DBA Short 27.47 22.1 +19.55% 28.50
11 Nov 2014 CurrencyShares Japanese Yen Trust FXY Short 84.29 81.22 +3.64% 90
17 Dec 2014 Livestock COW Short 28.881 26.6397 +7.76% 31.50
11 Mar 2015 SPDR Sector Trst Financial XLF Short 23.97 24.11 -0.58% 26
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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