Published October 15, 2012
Coming off what was the worst for equities since June, stocks will be looking to rebound this week. There will be no shortage of catalysts as the earnings parade that started with a trickle last week kicks into high gear this week. With the three major U.S. indexes each shedding more than two percent last week, earnings reports and guidance could be just the tonic beleaguered bulls are looking for. Or those catalysts could provide the bears with some more ammunition.
There is practically no refuge from the earning deluge this week as Citigroup (C) gets the party started before the bell with Wynn Resorts (WYNN) following after the close. Six members of the Dow Jones Industrial Average also report this week. With that, here is a look at some of the ETFs that will be in play throughout the week.
Financial Select Sector SPDR (XLF)
This cannot be encouraging. "This" being solid earnings reports from marquee XLF constituents J.P. Morgan Chase (JPM) and Wells Fargo (WFC) last Friday were not enough to prevent the ETF from falling almost 1.4 percent.
XLF now finds itself testing a critical support area and with a significant chunk of the ETF's weight reporting this week, that area could be violated. If that happens, the ETF needs to fund support at the 50-day moving average, which is around $15.50, or risk further declines.
Market Vectors Gold Miners ETF (GDX)
It was only a few weeks that traders were cheering the fact that gold miners were finally participating in bullion's upside. With enthusiasm for the third round of quantitative easing all but dead, precious metals look vulnerable here. Combine that with what is turning out to be a glum month for equities, which populate GDX, and this ETF is starting to look vulnerable again. Cope with that situation with the Direxion Daily Gold Miners Bear 3X Shares (DUST).
Market Vectors Oil Services ETF (OIH)
Nearly 36 percent of OIH's weight reports this week when Halliburton (HAL), Schlumberger (SLB) and Baker Hughes (BHI) step into the earnings confessional. Rarely are the previous quarter's results as important as what oil services companies say in terms of outlook. With natural gas prices perking up recently, investors may have little tolerance for negative comments from OIH constituents regarding profits at North American shale plays.
The excuse is no longer valid, particularly because oil production at U.S. shale fields is rising. That should be good news for the aforementioned trio and most of OIH's lineup.
WisdomTree Dividend ex-Financials Fund (DTN)
With financials look vulnerable, the recent pullback in the WisdomTree Dividend ex-Financials Fund could represent a buying opportunity for longer-term investors looking to bolster their income streams. The ex-financials theme helps lower DTN's beta and volatility, but that does not mean the ETF is perfect. Utilities and telecommunications names combine for over 24 percent of the ETF's weight and a case can be made that valuations on those sectors are getting a tad rich.
In its favor, DTN has a 30-day SEC yield of 3.8 percent, pays a monthly dividend (an unheralded feature of this ETF) and is usually less bad than the S&P 500 when the broad market index declines.
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