ETF Outlook for Tuesday, November 5, 2013


Here is your ETF Outlook for Tuesday November 5, 2013

SPDR Industrial ETF (NYSE:XLI)

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The ETF has been on a monster run the last three weeks as it has closed in positive territory 15 out of the last 18 trading sessions. The last two-day losing streak was onOctober 9.

Attempting to pick the top of a bull market is never a good idea, however the odds are setting up for XLI to at least pullback in the next couple of days. The chart shows an ETF that is extremely overbought and that could pullback to support in the $47-$47.47.75 area. The top stocks in the ETF are General Electric (NYSE:GE), Boeing (NYSE:BA), and United Technologies (NYSE:UTX).

PowerShares DB US Dollar Bullish ETF (NYSE:UUP)

A six-day winning streak was snapped yesterday for UUP after the ETF ran into a resistance level. The 50-day moving average is $21.74 and a steep downtrend line from the July high is also in the area.

The greenback has been on a tear higher, rallying two percent in the last week after the Fed meeting. The move may not sound like much, but for a currency ETF it is a sizable gain in a short period of time. If investors begin to focus on the jobs report at the end of the week and the potential for taper comes back into the mix it would hurt the value of the U.S. Dollar and UUP would resume its downtrend.

U.S. Natural Gas ETF (NYSE:UNG)

The ETF closed yesterday a $17.09, matching the lowest close in 16 months for the ETF. As the supply of natural gas continues to increase in the U.S. due to the fracking boom it has led to lower commodity prices. If the trend continues it could see the price continue to fall and test the low of $14.25 from April 2012.

The one silver lining for UNG is that it closed one penny off the low of the day and technically held above the old closing low. That being said, the trend is clearly lower for the energy commodity. The ProShares Ultra Short Natural Gas ETF (NYSE:KOLD)is 2x leveraged to the short side and was up 4 percent yesterday. The VelocityShares 3x Inverse Natural Gas ETN (NYSE:DGAZ) gained 6.5 percent yesterday and closed at a new two-month high. Both inverse natural gas ETFs are leveraged plays and extremely aggressive.

Market Vectors Agribusiness ETF (NYSE:MOO)

Earnings after the bell last night from CF Industries Holdings (NYSE:CF) fell by 42 percent in the third quarter on weaker revenue and margins. The stock was trading lower after the closing bell by about one percent, but should have more volatility this morning before the market opens.

Based on a recent rally from the lows and the disappointing earnings it would appear the stock will hit some headwinds today. The stock is a top ten holding for MOO and it makes up over four percent of the allocation. Big moves in either direction for CF will have an affect on the entire sector and likely have MOO more volatile than normal on Tuesday.

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