ETF Outlook for the Week of April 14, 2014:
SPDR Financial ETF (NYSE:XLF)
Citigroup (NYSE:C) reported better than expected earnings early Monday morning as it beat on both the top line and bottom line. The stock was rebounding in pre-market trading after closing out last week at the lowest level since June of last year.
The stock could be in the early stages of a rally after holding above the June low and trading at oversold levels. The stock is the fifth largest holding in XLF with an allocation of 5.3 percent. Two of the three largest holdings reported mixed earnings last week and pushed XLF to the lowest level in two months. XLF is getting an early boost from the C news and the fact the chart shows it is also oversold.
Rydex CurrencyShares Euro ETF (NYSE:FXE)
The ETF that tracks the European currency is down early Monday after comments from the ECB president. The currency is up six percent in the last year and is trading new a multi-year high versus the U.S. Dollar.
See also: Options Outlook For The Week Of April 14
The president said that a further strengthening of the Euro would require further monetary policy accommodation. In other words, if the Euro continues to rise versus the greenback it could result in the ECB making moves to lower the value of the Euro. The comment has led to FXE falling by approximately 0.5 percent this morning.
Market Vectors Russia ETF (NYSE:RSX)
The slowing of the news cycle out of Russia and the Ukraine as helped RSX rebound by 11.6 percent from the 3/13/14 low. However, the ETF has been moving sideways recently as investors are once again turning their attention to the region.
Pro-Russian militants have ignored a deadline by the Ukrainian government to disperse and many experts believe this could lead to Crimea, part two. If so, expect stocks in the region to once again be hurt by any military force or fear of force. The Russian stock market is down 1.5 percent Monday morning on the developments.
SPDR Utilities ETF (NYSE:XLU)
The utility stocks continue to be the best performing sector during the market volatility over the last month. The ETF closed out last week with a gain of 0.7 percent as it hit the highest level in six years. The attractiveness of above-average dividends as well as the perceived safety of the sector has been the two driving factors for investors to put money into the stocks.
The current yield on the ETF is 3.6 percent, nearly 100 basis points higher than the yield on the 10-year Treasury and well above the yield on the S&P 500. Support for the ETF will be in the $40.75-$41.00 area on any pullbacks in the coming days.
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