ETF Outlook for October 3, 2013

Rydex CurrencyShares Euro ETF (NYSE:FXE)

Shares hit a new eight-month high Wednesday after the European Central Bank held its benchmark interest rate at the record low of 0.50 percent. The Central Bank President Mario Draghi reassured everyone that the interest rates would remain low as he cited low inflation. The level to watch on FXE is $136.03, a multi-year high it hit earlier this year; the ETF closed at $134.46 yesterday.

One of the sectors that could be hardest hit by a government shutdown is the retailers. The National Retail Federation expects holiday (November-December) sales to increase by 3.9 percent to $602.1 billion.

A prolonged shutdown could lead to more frugal holiday shoppers and lower than anticipated sales growth at the retailers. The SPDR S&P Retail ETF (NYSE:XRT) has not yet been affected by the shutdown as the ETF sits less than 20 cents away from a new all-time high. However, if the shutdown drags on it will be worth watching the retail ETFs.

SPDR Euro STOXX 50 ETF (NYSE:FEZ)

Shares could be in focus Thursday after several PMI surveys show the continued momentum in the eurozone. The composite Eurozone PMI came in at 52.2 versus 51.5; Markit noted the region has enjoyed its best quarterly expansion in over two years.

From Germany to Italy, the individual countries impressed investors with the numbers reported overnight. FEZ is a basket of 50 large-cap European stocks that has enjoyed a solid year (up 12 percent), but is lagged the U.S. indices. If the momentum continues in the eurozone, expect FEZ to begin out performing its international peers.

SPDR S&P 500 ETF (NYSE:SPY)

This ETF has been holding up well since the government shutdown officially began and is now at an important support area. The ETF has been trading along one of its most widely followed indicators, the 50-day moving average.

The ETF closed Wednesday at $169.18 and the indicator sits at $168.18. The next few days could see increased volatility due to the government shutdown. That being said, the charts will often sift through the nonsense and the 50-day moving average could be worth watching. If the ETF can hold near the $168 area it will bode well for the ETF and entire market heading into October.