ETF Outlook for Tuesday, May 6, 2014
iShares MSCI Europe Financials ETF (NYSE: EUFN)
The European financials should be on the move today after several earnings reports in the sector as well as bullish economic news in the region.
The Markit PMI rose to 54.0 in April, in line with expectations, but up from 53.1 in March. The gauge, according to Markit, points to GDP growth of 0.5 percent in the second quarter, which would be the strongest in three years.
Barclays (NYSE: BCS) reported earnings overnight and the stock is down three percent in pre-market trading. On the flipside, UBS (NYSE: UBS), another European financial is trading higher this morning and could be set to break to a new monthly high.
iShares U.S. Aerospace & Defense Index ETF (NYSE: ITA)
Even though aerospace & defense is not a popular sector, it did close at a new monthly high Monday and is up 43 percent in the last 12 months. From the bottom in 2009 the ETF is up 290 percent.
The money being spent on wars and international conflicts has decreased over the years, but the sector continues to outperform. ITA should not be ignored.
iShares MSCI Israel Capped Investable Market ETF (NYSE: EIS)
From a technical perspective the ETF looks very attractive after a month-long pullback to support. The nearly five percent pullback from a multi-year high has the ETF sitting at price support at the $51 area, which also happens to be the 50-day moving average.
The ETF is very heavily invested, 24 percent, in Teva Pharmaceuticals (NYSE: TEVA). The stock has a similar pattern to EIS and will often times be a driver for the ETF.
The ETF is also heavily invested in the financial sector through a variety of individual stocks. While this may be more of a technical play, the stock looks to rally for a couple weeks based on the chart.
iShares MSCI UAE Capped ETF (NASDAQ: UAE)
The newest addition to the single-country ETF lineup at iShares concentrated on the United Arab Emirates. The ETF is composed of a total of 26 stocks that are all based in the UAE, and it charges an annual expense ratio of 0.61 percent.
The top holding is Emaar Properties, which makes up 21 percent of the portfolio. However, the financial sector dominates the ETF as nine of its the top ten stocks are in it. While UAE may be risky due to a lack of diversification, investors that invested in the UAE last year made a large amount of money.
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