ETF Outlook for Wednesday, July 2, 2014
iShares NASDAQ Biotech Index ETF (NASDAQ: IBB)
The March-April sell-off that wiped out large gains in the biotech sector is now in the rear view mirror and IBB is back to the best level since March. The ETF is up over 22 percent since mid-April when the entire sector capitulated as sellers drove down prices to levels not seen in months.
The selling coincided with selling in the high tech high-flyers and ended up sending a large portion of investors out of the sector. Unfortunately the same investor is trying to get back in to IBB and others after it has already rallied 22 percent. The way the chart is shaping up it would not be out of question to have IBB back at a new all-time high this quarter.
SPDR Financial ETF (NYSE: XLF)
The ETF kicked off the third quarter with a gain of 0.6 percent and came within a few pennies of closing at the best level in over five years. The closing high on June 9 was $22.90 and after reaching $22.98 yesterday, the ETF closed at $22.88. The ETF also closed at $22.88 on June 23, creating a triple top just below the $23 area.
If the ETF is able to close above resistance and confirm the breakout for a few days on bullish volume it will be a significant technical move for XLF.
iShares MSCI Taiwan ETF (NYSE: EWT)
A 1.8 percent rally to begin the third quarter has EWT at the best closing level in three years. The ETF was led higher by its largest holding, Taiwan Semiconductor (NYSE: TSM), which makes up 21 percent of the entire portfolio. TSM was up 2.7 percent yesterday and is trading at its best level in over a decade. With 58 percent of the ETF in the IT sector it is not a surprise that it has done well recently. Year-to-date EWT is up 11.6 percent.
SPDR Dow Jones Industrial Average ETF (NYSE: DIA)
The Dow came within two points of hitting 17,000 for the first time ever. With the futures up slightly this morning it is likely the index will breach yet another major psychological level. While it may not be significant for most investors, especially the big money, the media will run with the fact the Dow broke out again. This could lead to more money going into stocks especially with a long holiday weekend around the corner where everyone will be focused on the market at an all-time high.
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