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

Market Overview

 

Certain ETF equity areas of the market have been weak over recent sessions but the market as a whole remains in good health.

The NYSE Bullish % is a broad measure of the market's internals and it maintains its 2016 recovery with upward direction. Recent weakness by select areas, such as those related to energy, have had no impact as other areas, such as technology have been strong. 

Today we buy South Korea and also the Semiconductors. We enter shorts in the Banks fund and Russia, a regional ETF which is largely tied to the price of Crude Oil.

 


 

This Week's Trades

  • Semiconductor Index (SOXX) -  Buying
  • South Korea (EWY) - Buying
  • KBW Bank (KBE) - Shorting
  • Russia (RSX) - Shorting

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

 


 

Other ETF Highlights

 

  • NASDAQ 100 (QQQ) - Buy reiterated
  • Oil Service (OIH) - Sell
  • Junior Gold Miners (GDXJ) - Buy
  • Taiwan (EWT) - Buy reiterated
  • Japanese Yen Trust (FXY) - Buy
  • United States Oil (USO) - Sell reiterated
  • Emerging Markets Bond (EMB) - watch to sell

 


 

Analysis

 

US Equity Indices

 

The NASDAQ 100 QQQ fund made a new all-time high yesterday. Price and relative uptrends reasserted and we reiterate our advice to buy. The QQQ is providing upside leadership to the market's rally.

 

 

US Sector Indices

 

The Semiconductor Index P&F chart is holding at an all-time price high and the relative ratio is at a decade high.

Slight pull-back over recent sessions and we shall buy on that weakness today. We would look to exit should the index fall back beneath its breakout level across $100.

 

 

The KBW Bank ETF has struggled to resume its uptrend off the February low. Trading has fallen short of the peak from the start of June and has now encountered resistance from the 200-day exponential moving average. Potential for the price to roll-over from here and return towards the $28 level. 

The P&F relative chart remains in a long-term downtrend. We shall open a short in the KBE today. The trade would be exited should trading move up through $33.

 

 

The Oil Service fund fell 4.2% yesterday and is weak again this afternoon. Two year price and relative downtrends are resuming. We would be sellers on any strength. 

 

 

The Junior Gold Miners ETF is hitting new 52-week highs this afternoon. Momentum is not overbought and that should permit further strength in the sessions ahead. Small retreats are entry windows.

 

 

Other Developed Indices

 

The South Korea Index fund yesterday broke through falling P&F trendline resistance off the July 2014 peak.

Trading is moving off the lower end of a 5 year range, heading back towards that July 2014 peak ($67.76). 

The P&F relative chart shows a base attempt underway over the past year. 

With both charts showing upward direction, we shall buy the EWY on the close today. The trade would be exited should trading slip back beneath $53. 

 

 

 

The Taiwan Index fund made a new 52-week high yesterday. The 2016 rally is retracing the 2015 correction and that could continue all the way up to that high ($17.09).

Yesterday's outperformance reversed up the P&F relative chart from support at the 2001 low.

 

 

 

Emerging Indices

 

The Russia ETF has failed to extend higher following its mid-July 52-week high. The 14-day RSI exhibits a bearish momentum divergence. The relative ratio, versus the S&P 500, also failed to confirm the mid-July index high.

The fund looks tired and vulnerable here. We shall open a short in the RSX on the close this afternoon. The short would be covered should the index print new 52-week highs.

 

 

Currencies

 

The Japanese Yen Trust maintains its 2016 up trend, with a resumption today of 1.5% following news of fresh stimulus. New 52-week highs imminent. 

 

 

Commodities

 

The United States Oil Fund is reasserting its 2 year downtrend. Sufficient room on the RSI indicator to allow new lows over the next few weeks. 

The downtrend is strong and we reiterate our sell advice.

 

 

 

Bonds

 

The Emerging Markets Bond ETF is correcting near-term, heading towards the 50-day exponential moving average. If support from the average is not provided, then the 2016 rally would be placed under severe pressure.

 

MODEL PORTFOLIO

ETF Trading (Long/Short) Longs

Date Stock Code Type Open Price Current Price % P&L
22 Dec 2015 SPDR Consumer Staples XLP Long 50.55 54.76 +8.33%
26 Apr 2016 Sugar SGG Long 36.46 42.7463 +17.24%
28 Jun 2016 Gold GLD Long 125.32 129.22 +3.11%
28 Jun 2016 Market Vectors-Gold Miners GDX Long 26.6 30.93 +16.28%
5 Jul 2016 SPDR Sector Trst Utilities XLU Long 52.87 52.15 -1.36%
12 Jul 2016 ISHS Russell 2000 Index IWM Long 119.72 121.17 +1.21%
12 Jul 2016 iShares DJ US Telecom IYZ Long 34.42 34.28 -0.41%
12 Jul 2016 iShares Dow Jones US Aerospace & Defense Index Fund ITA Long 127.66 130.07 +1.89%
12 Jul 2016 SPDR S&P Retail ETF XRT Long 44.21 44.93 +1.63%
12 Jul 2016 Semiconductor HOLDRS SMH Long 59.36 63.68 +7.28%
12 Jul 2016 iShares Australia Index EWA Long 20.27 20.66 +1.92%
12 Jul 2016 iShares Taiwan Index EWT Long 14.52 15.2 +4.68%
12 Jul 2016 iPath MSCI India Index ETN INP Long 67.95 69.2127 +1.86%
19 Jul 2016 PowerShares QQQ QQQ Long 112.13 115.84 +3.31%
19 Jul 2016 SPDR Sector Trst Materials XLB Long 48.81 48.42 -0.80%
19 Jul 2016 SPDR Sector Trst Technology XLK Long 45.21 46.54 +2.94%
19 Jul 2016 iShares Hong Kong Index EWH Long 20.37 20.85 +2.36%
19 Jul 2016 Base Metals DBB Long 13.79 13.67 -0.87%
26 Jul 2016 SPDR Consumer Discretionary XLY Long 81.63 81.75 +0.15%
26 Jul 2016 SPDR Sector Trst Health Care XLV Long 74.78 75.68 +1.20%
26 Jul 2016 iShares Brazil Index EWZ Long 32.57 32.55 -0.06%

ETF Trading (Long/Short) Shorts

Date Stock Code Type Open Price Current Price % P&L
28 Jun 2016 CurrencyShares British Pound Sterling Trust FXB Short 130.57 128.77 +1.38%
12 Jul 2016 United States Oil Fund USO Short 11.19 9.41 +15.91%
12 Jul 2016 Livestock COW Short 22.3388 21.93 +1.83%
12 Jul 2016 CurrencyShares Canadian Dollar Trust FXC Short 75.97 75.45 +0.68%
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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