ETF Outlook for Thursday October 24, 2013

iShares MSCI Japan ETF (NYSE:EWJ)

After closing at a new five-month high on Tuesday, the ETF fell by 2.1 percent Wednesday as the value of the Japanese yen gapped higher. The ETF has had an issue in the past closing above the $12.25 level and it is beginning Thursday at $11.90.

A close above $12.25 would put the ETF at its best level since 2008 and signify a major breakout for EWJ. Investors interested in playing both the Japanese equity market and the falling Yen should consider the WisdomTree Japan Hedged Equity ETF (NYSE:DXJ) that goes long Japanese stocks and short the Yen.

iShares Dow Jones Transportation ETF (NYSE:IYT)

Bucking the bearish trend yesterday was the transportation stocks, with IYT hitting a new all-time high and closing the day up 0.7 percent. The rally was led by a breakout and surge from the railroad stocks. Norfolk Southern (NYSE:NSC) and Kansas City Southern (NYSE:KSU) both closed the day with big gains and are sitting at all-time highs.

The airlines are also doing well as the price of oil continues to fall. As long as the economy remains somewhat steady it appears that lower oil prices and the upcoming holiday season could be a boom for the sector.

iShares 20+ Year Treasury Bond ETF (NYSE:TLT)

A three-month high for the long bond as investors continue to make the bet that the Fed will not taper until next year. This action would keep interest rates down, thus pushing the value of bond ETFs higher.

TLT closed Wednesday at $108.31 and is well off the August low, but it has a long way to go to get back to the 2013 high of $124. Bond investors should not get overly bullish, as the rally will likely be short-lived.