ETF Outlook for the week of March 10, 2014
Market Vectors Gold Miners ETF (NYSE:GDX)
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The gold mining stocks has been the big winners in 2014 with GDX up 24 percent year-to-date. The move has coincided with a rally in gold to the best level in five months as stocks are eking out a small gain.
The pattern that has been forming since October is similar to a reverse head and shoulders pattern, which could be bullish and market a bottom for the beaten down ETF. The level to watch this week is $27; if GDX can break above that level and hold the breakout it would be a buy signal that could send the ETF up another 15 percent to its next resistance level.
iShares S&P India Nifty 50 Index ETF (NYSE:INDY)
The Indian ETF has been in a long-term downtrend since late 2010, however a recent rally in the shares has the ETF at its best level in nine months. From a technical perspective, the ETF confirmed a breakout above a price level that has proven to be an area of resistance in the past. As long as INDY can continue to trade above $24 it could be the first step in breaking the long-term downtrend.
The emerging markets have been laggards, especially the BRIC countries, which India is a part of. That being said, at some point the asset class will get to a valuation where investors view it as a long-term value play. The recent action in INDY suggests that time may have come for India.
Rydex CurrencyShares Euro ETF (NYSE:FXE)
The eurozone currency closed out the week at the best level in over two years as the U.S. dollar trades near a two-year low and the Japanese Yen continues its downward spiral. When looking at the FX market the two strongest currencies over the last few months have been the Euro and the Rydex CurrencyShares British Pound ETF (NYSE:FXB).
The European currencies were decimated during the global financial crisis, but not that investors feel the end of the eurozone is no longer an option, both the Euro and Pound have been rallying. Other than the U.S. dollar, which has been struggling, where else do FX investors find safety in the world?
Global X Lithium ETF (NYSE:LIT)
Last week the niched ETF continued its 2014 rally as money continued to move into the big three lithium producers and the smaller battery manufacturers. The stocks can thank Tesla Motors (NASDAQ:TSLA) for the $5 billion announcement in regards to a battery factory. The ETF should be on the move again Monday after the ETFs second largest holding announced it will split itself into two separate companies.
FMC Corp (NYSE:FMC) was up big pre-market after the announcement as it traded at a new all-time high. The stock is one of the big three lithium stocks and is the number two holding in LIT. The news is company specific, but it should be enough to help LIT outperform to kick off the week.
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