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

Market Overview

The equity ETF market has wobbled the past week but in general, uptrends still stand. Biotech got heavily hit but as our analysis later shows, its rising channel remains.

Our short-term-composite is in an uptrend, following a reversal up from the upper end of oversold in late March. The recovery will have small set-backs, such as yesterday's drop of 1.7%, but overall we expect the indicator to work higher into overbought before caution is necessary.

Today we buy two equity funds which are outperforming, the small caps and energy.

 

 

 


 

This Week's Trades

  • Russell 2000 (IWM) - buying, stoploss at $21
  • Energy (XLE) - buying, stoploss at $72.50

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

 


 

Other ETF Highlights

 

US Equity Indices

  • see trades

US Sector Indices

  • Utilities (XLU) - buy reiterated
  • Biotechnology (IBB) - buy a reassertion

Other Developed Indices

  • Canada Index (EWC) - watch to buy

Emerging Indices

  • China 25 Index (FXI) - watch to buy
  • India Index (INP) - buy

Currencies

  • Dollar Index Bullish (UUP) - buy

Commodities

  • Base Metals (DBB) - sell

Bonds

  • 1-3 year T-Bond Fund (SHY) - buy

 


 

Analysis

 

US Equity Indices

 

The Russell 2000 (IWM) ETF maintains its uptrend with a recent successful test of its 50-day exponential moving average. The relative ratio versus the S&P 500 made a new 2015 high yesterday.

Momentum is well positioned to allow the price to push to record highs over the next few weeks.

We shall open a long in the IWM on the close today. The stoploss will be at $121.  

 

 

 

 

US Sector Indices

 

The Energy (XLE) fund has formed two higher lows since bottoming in January. The relative ratio is rallying off its low from mid-January, resulting in slight outperformance. The 14-day RSI is at neutral.

Given the developing uptrend on the price chart, we shall open a long here. The stoploss will be at $72.50.

 

 

 

We reiterate our buy advice in the Utilities (XLU) fund as it continues to build a base at support from the 200-day exponential moving average.

The relative ratio is rallying off support from 52-week lows and historically April is a good month for the sector.

Patient investors are rewarded by the 3.43% yield.

 

 

The uptrend for the Biotechnology (IBB) fund is consolidating on a price and relative basis. For the time being support is being found at the 50-day exponential moving average.

We would look to buy on evidence of a reassertion.

 

 

Other Developed Indices

 

The Canada Index (EWC) is worth watching as over the past three months the price has been attempting to base. Rallying and holding a move above $29 would confirm a bottom and thereby cue entry.

 

 

Emerging Indices

 

The China 25 Index (FXI) has strengthened on its price chart the past week with a box fill to the upside. The price is trending towards its high from late 2010 at $47.

Longs would be worth considering should a relative base confirm on the P&F relative ratio by a box fill above the August 2014 high. 

 

 

The India Index (INP) ETN is pulling away from support off its 200-day exponential moving average. An uptrend channel off the 2013 low remains in play. Momentum is not overbought. Further strength expected.

 

 

Currencies

 

The Dollar Index Bullish (UUP) chart is attempting to resume its yearlong uptrend following the March downside reaction. That drop enabled momentum, the 14-day RSI, to unwind back to neutral.

Longs could use $25 as a stoploss as a move to there would break the 50-day exponential moving average.

 

 

 

Commodities

 

The Base Metals (DBB) fund failed to hold its March pop above $15.50 and is now breaking lower again. The medium-term downtrend is likely resuming. The 14-day RSI is only at neutral and that will permit a break by the price to new 52-week lows. An underperformer since early August last year.

 

 

 

Bonds

The 1-3 year T-Bond Fund (SHY) looks to be resuming its long-term uptrend. A new all-time closing high could be recorded over the next few weeks.

 

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 147.52 172.42 +16.88% 166.50
3 Dec 2014 SPDR Sector Trst Utilities XLU Long 46.27 44.43 -3.98% 43
10 Feb 2015 SPDR Sector Trst Health Care XLV Long 70.12 72.5 +3.39% 66.50
18 Mar 2015 Gold GLD Long 112.37 113.66 +1.15% 109
18 Mar 2015 US 20+yrs TLT Long 131.49 130.69 -0.61% 120
24 Mar 2015 SPDR Consumer Staples XLP Long 48.74 48.74 0.00% 47.75
24 Mar 2015 iShares South Korea Index EWY Long 58.08 57.24 -1.45% 56
24 Mar 2015 CurrencyShares Swiss Franc Trust FXF Long 101.73 100.23 -1.47% 97
24 Mar 2015 Silver SLV Long 16.28 15.93 -2.15% 15.25
24 Mar 2015 iShares 7-10 yr T-Bond Fund IEF Long 108.78 108.39 -0.36% 107

ETF Trading (Long/Short) Shorts

Date Stock Code Type Open Price Current Price % P&L Stop
2 Jul 2014 Agriculture DBA Short 27.47 22.14 +19.40% 28.50
1 Oct 2014 WisdomTree Dreyfus Brazilian Real Fund BZF Short 17.67 14.5499 +17.66% 15.40
11 Nov 2014 CurrencyShares Japanese Yen Trust FXY Short 84.29 81.02 +3.88% 90
17 Dec 2014 Livestock COW Short 28.881 27.0101 +6.48% 31.50
4 Mar 2015 SPDR S&P Metals and Mining ETF XME Short 28.2 27.19 +3.58% 32
11 Mar 2015 SPDR Sector Trst Financial XLF Short 23.97 24.11 -0.58% 26
11 Mar 2015 Market Vectors Global Alternative Energy GEX Short 56.98 58.03 -1.84% 62
11 Mar 2015 Market Vectors Russia ETF RSX Short 16.54 17.03 -2.96% 19
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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