ETF Outlook for Wednesday, July 9, 2014:
The U.S. stock markets continued to slide on Tuesday with the S&P 500 now down 1.1 percent from the all-time high. Amazingly, this is the largest pullback since May and the index has not pulled back more than four percent since April.
A pullback was overdue and this may be the start of more selling as earnings season could add volatility to a rather mundane market.
United States Oil ETF (NYSE:USO)
The price of oil has been falling as the conflict in Iraq has subsided for the time being and the rockets flying in Israel are not putting any pressure on the commodity.
USO has pulled back three percent from the June high and is now sitting on support at the 50-day moving average and has an RSI that is very oversold. The ETF closed on Tuesday with a $0.01 gain after five consecutive down days. Technically, the ETF is poised for a bounce at least in the short-term.
Market Vectors Indonesia Index ETF (NYSE:IDX)
The fourth most populous country in the world went to the polls this week to vote for the next president. The results of the two-man race will not be released for at least a week as the country collects the votes from its thousands of islands.
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The economy was a major factor in voting as GDP growth has slowed down to five to six percent. With 86 percent of the population under 55 years old there is an opportunity for great growth in the nation.
The ETF was up 0.6 percent on Tuesday as the rest of the world struggled. A breakout above resistance at $27.50 would be a major move for the ETF in the coming days.
iShares MSCI Canada Index ETF (NYSE:EWC)
The neighbors to the North showed strength on Tuesday as the ETF closed unchanged, much better than the 0.7 percent drop in the S&P 500. A mix of sectors led the move, but the financials, which make up 37 percent of the ETF, held up well versus the overall market.
Investors that want exposure to developed markets outside of the U.S. should not ignore Canada. Even with the close proximity, the country is vastly different, especially their banks and energy exposure.
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