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ETF Global Opportunities
Weekly analysis on US stocks, sectors, commodities and global indices.
26 April 2016
     

Market Overview

The bulls minus bears spread on our Advisors Sentiment Survey is now trading in the middle of its 5 year range. That is not a broad market sell signal but it does mean investors need to be more selective with regard to buying equity ETFs.

At the January and February lows all boats were lifted but now some areas will naturally begin to lag and underperform. Today we highlight some funds where caution may be necessary, international equity funds such as Germany and Hong Kong, plus the Emerging market fund.

 

 


 

This Week's Trades

  • Homebuilders - shorting
  • Sugar - buying

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

 


 

Other ETF Highlights

  • Dow Jones Industrials - buy
  • Materials - buy
  • Utilities - sell
  • Germany - relative sell
  • Hong Kong - relative sell
  • Emerging Markets - relative sell
  • Brazilian Real - buy
  • US 20+ years Bond - sell reiterated

 


 

Analysis

 

US Equity Indices

 

The Dow Jones Industrials fund maintains its uptrend off the January low, working its way towards the record high from the first half of 2015. The 14-day RSI is not overbought due to the steady nature of the advance. Weakness along the way is proving to be long entry opportunities.

 

 

US Sector Indices

 

The P&F price and relative charts for the Materials sector ETF continue their 2016 recoveries. The price is testing February 2015 trendline resistance and breaking through would open up an extension to new all-time highs.

 

The Homebuilders fund is running into resistance from the October through December consolidation band. The 14-day RSI appears to be rolling over, a sign of possible impending price weakness. 

We shall open a short in the XHB this afternoon. The trade would be exited should the price break up through $37.

 

 

The Utilities ETF has failed at its early 2015 peak, with a brief bull-trap breakout of that level earlier this month. The price could potentially work its way down to the 2015 lows over the next several months.

The P&F relative chart has rolled over from trendline resistance dating back to 2008, a strong technical reason alone to avoid longs.

 

 

 

Other Developed Indices

 

The Germany Index ETF is encountering resistance from its November/December 2015 highs. With momentum, the 14-day RSI, turning down from overbought, the fund may be entering a corrective phase. 

The P&F relative chart, versus U.S. equities, sits at a decade low, a good reason to avoid longs for the time being.

 

 

The Hong Kong fund is also nearing potential resistance, the peak from the October 2015 oversold bounce. The 14-day RSI is developing a small bearish divergence. Until there is a decisive break of that $21 level, longs should be avoided. The P&F relative chart has been trending lower since 2011.

 

 

Emerging Indices

 

The Emerging Markets fund is nearing its peak from October 2015, a potential resistance level. Trading is above the 200-day exponential moving average but the MACD exhibits a small bearish divergence. The price chart is vulnerable here and with the P&F relative chart, versus the U.S. equity market, at a long-term low, we would continue to avoid.

 

 

 

Currencies

 

The Brazilian Real ETF is channeling higher off its January low.  That rise has cleared the 200-day exponential moving average and that is now support. The back and forth action has resulted in a comfortable momentum condition. With the 14-day RSI being just above neutral, the uptrend should soon resume.

 

 

 

Commodities

 

The Sugar fund has developed a rising trend off the August 2015 low. Support has been found from the 200-day exponential moving average, a line which is turning up following a flattening out process. The 14-day RSI has just turned up from neutral and that should allow new 52-week price highs soon. 

We shall enter a long position in the SGG on the close today and would consider exiting should the price deteriorate beneath $32.

 

 

 

Bonds

 

The US 20+ years Bond fund is testing its lows from March. Breaking down through them would activate a top formation. 

The P&F relative chart exhibits poor performance since February. We reiterate our sell advice.

 

MODEL PORTFOLIO

ETF Trading (Long/Short) Longs

Date Stock Code Type Open Price Current Price % P&L
27 Aug 2015 PowerShares QQQ QQQ Long 105.64 108.98 +3.16%
3 Sep 2015 SPDR Sector Trst Technology XLK Long 39.91 43.45 +8.87%
3 Nov 2015 iShares Japan Index EWJ Long 12.4 12.13 -2.18%
22 Dec 2015 SPDR Consumer Staples XLP Long 50.55 52.32 +3.50%
30 Dec 2015 iShares DJ US Medical Devices Fund IHI Long 123.56 129.5 +4.81%
10 Feb 2016 Diamond Trust- 1/100 DJIA DIA Long 159.39 179.54 +12.64%
17 Feb 2016 PowerShares Aerospace & Defense PPA Long 32.89 36.05 +9.61%
2 Mar 2016 Market Vectors Russia ETF RSX Long 15.12 17.23 +13.96%
17 Mar 2016 SPDR S&P Metals and Mining ETF XME Long 20.73 22.56 +8.83%
17 Mar 2016 CurrencyShares Canadian Dollar Trust FXC Long 76.3 78.11 +2.37%
17 Mar 2016 United States Oil Fund USO Long 10.55 10.55 0.00%
22 Mar 2016 DJ US Pharmaceuticals Index Fund IHE Long 138.19 146.02 +5.67%
29 Mar 2016 SPDR Consumer Discretionary XLY Long 78.69 79.55 +1.09%
29 Mar 2016 iShares DJ Transportation Average IYT Long 142.47 143.21 +0.52%
5 Apr 2016 iShares Nasdaq Biotechnology IBB Long 269.64 285.95 +6.05%
5 Apr 2016 SPDR Sector Trst Health Care XLV Long 68.47 71.59 +4.56%
12 Apr 2016 SPDR Sector Trst Energy XLE Long 63.96 66.29 +3.64%
12 Apr 2016 iShares Brazil Index EWZ Long 28.1 27.66 -1.57%
21 Apr 2016 SPDR Sector Trst Financial XLF Long 23.33 23.5 +0.73%
21 Apr 2016 SPDR Sector Trst Industrial XLI Long 56.27 56.14 -0.23%
21 Apr 2016 Base Metals DBB Long 12.97 12.94 -0.23%

 

ETF Trading (Long/Short) Shorts

Date Stock Code Type Open Price Current Price % P&L
3 Feb 2016 Natural Gas UNG Short 7.55 7.09 +6.09%
3 Feb 2016 US 20+yrs TLT Short 127.95 127.83 +0.09%
5 Apr 2016 Livestock COW Short 23.54 23.0166 +2.22%
Model Portfolio Notes
Opening of positions – Positions are opened on the immediate closing price following the report.
 
Stops - Two flash crashes (2010, 2015) and occasional bad prices have forced us to drop strict stops. Positons will no longer be stopped out but we shall suggest a region as to where we MAY exit. 
 
Closures - With positions not being stopped out, we shall only exit positions via advice in the report. When we exit a trade, the next closing price is used. 
 
Allocation – Each trade is allocated 5% of the portfolio.
 
 
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Copyright 2016 by Stockcube Research Ltd.





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