ETF Outlook for Wednesday, July 30, 2014
The pullback in the U.S. stock market continued yesterday with all three major indices closing in the red.
The NASDAQ held up the best with a small loss of two percent, led by some strong technology earnings. The tech-heavy index should once again show relative strength after Twitter (NYSE:TWTR) reported earnings last night that beat estimates. The stock is up more than 20 percent in pre-market trading.
Big economic numbers are set to move the market today, particularly second quarter GDP and the ADP jobs report. GDP came in much stronger than expected, but the jobs report, while good, was disappointing. There is also the end of the Federal Reserve's Open Market Committee meeting and a statement from Janet Yellen that will undoubtedly have an affect on stock prices.
Buckle in for a wild day.
SPDR Dow Jones Industrial Average ETF (NYSE:DIA)
The index ETF is now off 1.3 percent from its all-time high it set two weeks ago. Yesterdays midday reversal on the chart is bearish in the short-term chart, but with the market set to open higher today it could erase the negative tone.
As far as support is concerned, DIA is close to an important level that needs to be monitored. The 50-day moving average ($168.39) is only 0.25 percent below where the ETF closed on Monday. In the past the indicator has been an area where the ETF has bounced and buyers came into the market. Another bounce off the level could indicate an ETF that is ready to once again rally to a new all-time high.
Global X Social Media ETF (NYSE:SOCL)
It will be a big day for SOCL with Twitter trading higher by more than 20 percent before the opening bell even rings. Even though Twitter only makes up four percent of the allocation and is the 12th largest holding, the news will put a bid under all related stocks in the niche sector.
Two of the top holdings, Facebook (NASDAQ:FB) and LinkedIn (NYSE:LNKD) are also trading higher in the pre-market. A close above $19.91 would be a significant breakout for the ETF and could start a new leg higher that could test the 52-week high in the $23 area.
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