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

Market Overview


Over the past week external events (fears over the Chinese market and economy) caused a sharp unwinding on our short-term-composite as equity ETFs retreated. That indicator is now turning up as domestic equity funds recover to resume their general uptrends.

The second chart shows the improving breadth situation which adds further encouragement. Some equity ETFs, such as the DIA, broke to new lows for July on Monday yet short-term breadth for the general market held up, printing a slight bullish divergence.  Today we add a long in the DIA and also the XLY sector fund.






This Week's Trades

  • Dow Jones Industrial ETF (DIA) - buying, stoploss at $174, EOD type
  • Consumer Discretionary (XLY) - buying, stoploss at $77.50, EOD3 type
  • British Pound Sterling (FXB) - buying, stoploss at $150, EOD3 type
  • Emerging Markets Bond (EMB) - shorting, stoploss at $110, EOD3 type

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



Other ETF Highlights


US Equity Indices

  • NASDAQ 100 (QQQ) - buy reiterated
  • Midcap Index (MDY) - buy reiterated

US Sector Indices

  • Materials (XLB) - buy

Other Developed Indices

  • Japan SmallCap Dividend Fund (DFJ) - buy

Emerging Indices

  • Chile (ECH) - sell


  • see trades


  • U.S. Oil Fund (USO) - trading buy


  • see trades





US Equity Indices


We shall open a long in the Dow Jones Industrial ETF (DIA) as it finds support from the region of its 200-day exponential moving average and also the low from earlier this month. Momentum is turning up from oversold.

The stoploss for our long will be placed at $174 and is an EOD type (exiting following one close beneath that level). 



We reiterate our buy advice on the NASDAQ 100 (QQQ). The fund has just retreated down to support from its 50-day exponential moving average, creating a buying opportunity. Momentum has unwound down to neutral, preparing the chart for the next leg higher. 

The P&F chart illustrates the small recent pull-back in the context of the primary uptrend. 



We also reiterate our buy advice on the Midcap Index (MDY) fund. It too has just pulled back to moving average support and is also close to oversold. 

The P&F relative chart reflects the long-term trend of outperformance by the mid-caps. 





US Sector Indices


The Consumer Discretionary (XLY) fund moved to all-time price and relative highs this month. A small reaction down occurred over the past week but was too shallow to damage the uptrend. 

We shall buy the XLY on the close today ahead of an expected breakout to record highs. The stoploss will be at $77.50 and will be an EOD3 type (please see stop descriptions at bottom of report). 



The Materials (XLB) fund may be finding support from the region of its October 2014 low. Momentum, the 14-day RSI, is oversold and turning up. 

The P&F price chart shows the correction over the past few months has carried trading down to trendline support drawn up from the late 2011 low. 





Other Developed Indices


The Japan SmallCap Dividend Fund (DFJ) is consolidating across support from its 100-day exponential moving average. The general price trend remains up as does the relative ratio versus the U.S. market. 

The 14-day RSI is at neutral and that suggests an imminent upside reassertion. 





Emerging Indices


Chile (ECH) is making new five year price lows and all-time relative lows (versus the U.S. equity market). We would see any price strength as a selling opportunity. Over the medium-term we would expect the fund to trend down towards its lows from 2008.





The British Pound Sterling (FXB) looks to be establishing an uptrend off its lows in April. The price is now gaining a foot-hold above both the 50-day and 200-day exponential moving averages. The 14-day RSI is perfectly positioned to allow an upside reassertion as it turns up from neutral. 

We shall buy the FXB this afternoon. Our stoploss will be at $150, an EOD3 type. Trade aims for a return to $160.






The U.S. Oil Fund (USO), which attempts to track the price of Crude Oil, could be finding support from its March low. Certainly the chart is oversold sufficiently to allow a rally off support from that prior low. Should that move last for more than just a few sessions it would indicate a rally up towards the top end of a 2015 range around $20. 






The Emerging Markets Bond (EMB) remains weak, with the price now slipping beneath prior support across $109. Further weakness expected as the chart is not oversold. 

With the relative ratio, versus the S&P 500, at record lows, we shall open a short. Our stoploss will be at $110, an EOD3 stop type.



ETF Trading (Long/Short) Longs


Date Stock Code Type Open Price Current Price % P&L Target Stop Stop Type
19 Nov 2014 DJ US Pharmaceuticals Index Fund IHE Long 147.52 182.19 +23.50%   171.50 EOD3
10 Feb 2015 SPDR Sector Trst Health Care XLV Long 70.12 76.13 +8.57%   73 EOD3
24 Mar 2015 CurrencyShares Swiss Franc Trust FXF Long 101.73 100.8 -0.91%   97 EOD3
8 Apr 2015 PowerShares QQQ QQQ Long 106.64 111.13 +4.21%   103.50 EOD3
29 Apr 2015 iShares DJ US Health Care Providers Fund IHF Long 130.785 138.96 +6.25%   123 EOD3
6 May 2015 SPDR S&P 500 Trust SPY Long 208.04 209.33 +0.62%   204.50 EOD3
3 Jun 2015 iShares GS Software Index Fund IGV Long 102.19 101.22 -0.95%   98 EOD3
3 Jun 2015 CurrencyShares Euro Trust FXE Long 110.77 108.56 -2.00%   107 EOD3
10 Jun 2015 DJ US Regional Banks Index Fund IAT Long 37.53 36.79 -1.97%   35.80 EOD3
10 Jun 2015 WisdomTree Japan SmallCap Dividend Fund DFJ Long 56.71 56.15 -0.99%   55 EOD3
24 Jun 2015 iShares Japan Index EWJ Long 13.06 12.76 -2.30%   12.60 EOD3
1 Jul 2015 iShares Nasdaq Biotechnology IBB Long 369.9 382.84 +3.50%   360 EOD3
8 Jul 2015 SPDR Midcap Index Trust MDY Long 270.37 269.35 -0.38%   268 EOD3
14 Jul 2015 SPDR Consumer Staples XLP Long 49.72 50.21 +0.99%   48.50 EOD3

ETF Trading (Long/Short) Shorts

Date Stock Code Type Open Price Current Price % P&L Target Stop Stop Type
2 Jul 2014 Agriculture ETF DBA Short 27.47 21.58 +21.44%   28.50 EOD3
11 Nov 2014 CurrencyShares Japanese Yen Trust FXY Short 84.29 78.58 +6.77% . 90 EOD3
24 Jun 2015 iShares 7-10 yr T-Bond Fund IEF Short 104.85 105.85 -0.95%   106 EOD3
8 Jul 2015 iShares FTSE/Xinhua China 25 Index Fund FXI Short 38.95 40.79 -4.72%   47 EOD3
22 Jul 2015 SPDR S&P Emerging Europe GUR Short 27.19 26.316 +3.21%   29 EOD3
Model Portfolio Notes
Allocation  – Each trade is allocated 5% of the portfolio.
Opening of positions – Positions are opened on the immediate closing price following the report.
Guide to Stops
ITD - executed when the stop is touched intraday. Should the stock gap through an intraday level at the open then the trade will be closed out at the opening price.
EOD - activated following an end of day close beneath the stop level. Trade then closed out on the following session. Our trade will be closed out at the day's mid-range (to reflect a fair/average exit price).
EOD3 - activated following three consecutive end-of-day closes beneath the stop level. Trade then closed out on the fourth day. Our trade is closed out at the day's mid-range. 
Adjusted stops are effective from the time of publication.
Manual closures detailed in report - Closed out on the session's closing price.
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