ETF Outlook for Wednesday, March 12, 2014
SPDR S&P Biotech ETF (XBI)
The ETF has moved into oversold territory based on the RSI indicator for the first time since early February. The last three times the RSI fell to an oversold level it marked a buying opportunity for XBI. The current pullback from an all-time high has now reached 6.5 percent and the ETF is sitting at price support at the $159 area.
Not far below the price support is the 50-day moving average at $153, which has also proven to be support. The biotech stocks remain one of the top performing sectors in 2014, but a pullback was needed and if the pattern repeats itself a buying opportunity may arise in the coming days.
Market Vectors Russia ETF (RSX)
After the initial fall last Monday after it was announced Russian troops entered the Crimean peninsula the ETF closed at $22.76. Yesterday RSX finished the day at $22.40, the lowest close since August 2009. At this point it may find some support at last weeks intraday low of $22.16, however below that level it will be difficult to find a price where the selling will begin to subside.
Even though the ETF will be news driven in the coming week, it is important to take note of support levels when considering buying into the weakness.
Teucrium Wheat Fund (WEAT)
One area investors have been finding solace in regards to the situation in the Ukraine as been WEAT. The fund invests in three futures contracts on the commodity: the second-to-expire, the third-to-expire, and the December 2014 contract.
The methodology is designed to capture the daily moves in the wheat futures market. The fund is up 18 percent since hitting a multi-year low on 1/29/14. Due to the large supply in the Ukraine and Russia there are fears supplies will be disrupted, thus leading to higher prices around the globe.
iPath Dow Jones-UBS Copper ETN (JJC)
Copper futures posted their biggest two-day drop in 28 months as fears out of China have the metal hitting new multi-year lows. JJC is now down 8.6 percent in the last three trading sessions after falling another 3.2 percent yesterday. JJC tracks the price of copper futures.
The copper stocks are also taking a big hit with the Global X Copper Miners ETF (COPX) down 10 percent in the last three trading sessions after hitting a multi-month high last week. The short-term and long-term outlook for the metal and its related stocks hinge on the Chinese economy and demand for copper.
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