ETF Outlook For Friday, May 23, 2014 (PJP, EWC, SPY, FEZ, TD)

Matthew McCall

ETF Outlook For Friday, May 23, 2014

iShares MSCI Canada ETF (NYSE: EWC)

The top three holdings in the ETF are Canadian financials, and the sector accounts for 37 percent of the allocation. Several Canadian banks hit new highs yesterday after earnings results from Toronto Dominion Bank (NYSE: TD) helped boost the entire sector. Unsurprisingly EWC rallied to its best level in three years.

More Canadian banks will report earnings in the coming days. Their numbers will be key to whether EWC continues the rally to new multi-year highs.

PowerShares Pharmaceutical ETF (NYSE: PJP)

The ETF broke out to a new two-month high yesterday after trading in a narrow range over the last four weeks.

The ETF is composed of both large pharmaceuticals and biotech stocks struggled in early 2014 as money flowed out of the high-flying biotech stocks. The big move by PJP is significant on a technical basis and now has the ETF only 3.4 percent below the all-time closing high set in early March.

The new short-term support level is at the $58 level.

SPDR S&P 500 ETF (NYSE: SPY)

The market bellwether came close to closing at a new all-time high yesterday, but some slight afternoon selling kept SPY from achieving the feat. Today the volume will be below average as investors hit the roads early on the unofficial start to the summer.

Expect the market to stay within a narrow trading range and head into the long weekend near or at a new all-time high. Investors need to stop ignoring the action in the market and begin to realize this is a strong and healthy bull market that continues climb the proverbial wall of worry.

SPDR Euro Stoxx 50 ETF (NYSE: FEZ)

The basket of 50 large European stocks is up 2.7 percent in 2013, right in line with SPY. However, based on valuations the ETF is more attractive than SPY at this point. That could be due to the black cloud that still hangs over Europe or the fact that the economic numbers in Europe are starting to slow. A new reading out of Germany last night showed the economy continuing to weaken from earlier this year.

The bulls and bears will continue to battle it out over Western Europe, but longer-term the valuations are difficult to ignore.

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