Euro ETFs Suffer From Greece (EWI, EFA, FXE)
by ilene - November 1st, 2011 5:22 pm
Courtesy of John Nyaradi.
European ETFs such as (AMEX:EWI), (AMEX:EFA), and (AMEX:FXE) all suffered today on news that Greece plans to hold a referendum vote in order to pass Euro austerity measures.
I do wonder what on earth Greek Prime Minister Papandreou is thinking, and aparantly his government is wondering the same thing, as Papandreou faces a vote of no confidence this Friday.
Either way, it appears we are back to square one before last week’s massive rally and Euro-compromise, as markets have returned to previous support levels as predicted last week.
The pain starts with the iShares MSCI EAFE Index Fund (AMEX:EFA), which tracks stocks within the Euro-zone and far-east. (AMEX:EFA) lost a whopping 3.13% today in response to Papandreou’s speech; it appears that investors are not happy and do not want to keep drinking the sugar water served last week.
The pain continued with the iShares MSCI Italy Index (AMEX:EWI), as the ETF crashed 6.96% today. If investors don’t like Greece, they certainly do not like Italy, which could be next on the chopping block, and this serves as a painful reminder that the Euro crisis is far from being over as Italy mammoth-like compared to Greece.
And lastly, the CurrencyShares Euro Trust (AMEX:FXE) did not fare will either as the ETF took a 1.04% drop while investors lost faith in the Euro dollar.
Markets at home did not respond well either, as the SPDR S&P 500 ETF (AMEX:SPY) fell hard and lost 2.79%, and SPDR Dow Jones Industrial Average ETF (AMEX:DIA) followed with a 2.48% drop.
All in all, it appears that we are back to square one with Greece, and I am curious how Chancellor Merkel and President Sarkozy will respond in the coming days and weeks.
In other mundane news, tomorrow brings the FOMC statement on interest rates and Chairman Bernanke’s press conference, alongside the ADP private sector employment report.
Speaking about economic recovery, American auto sales have increased for October, however this morning’s ISM report also contributed to today’s panic. Meanwhile, MF Global Holdings (NYSE:MF) continues to make the news with new reports of the Bank using investors’ money to stay afloat. Read more about MF Global.
Bottom Line: Greece is a wildcard, and (AMEX:EWI), (AMEX:EFA), and (AMEX:FXE) all…
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DiggAuto Sales Post October Gains (F, GM, SPY, XLY)
by ilene - November 1st, 2011 2:02 pm
Courtesy of John Nyaradi.
U.S. auto sales post strong gains in October
Both foreign and domestic auto manufacturers reported strong sales gains for October in the important Consumer Discretionary Sector (AMEX:XLY)
Strong results were posted by S&P 500 (AMEX:SPY) component Ford (NYSE:F) with sales up 6%, Chrysler rising +27%, and General Motors (NYSE:GM) gaining a 2% improvement. Double digit results were reported by Mercedes, Volkswagen and KIA.
Forward looking estimates point towards continued improvement in the sector.
Bottom line: The American consumer, (AMEX:XLY) all important contributor to 70% of GDP, continues to show remarkable resilience in the face of high unemployment and scary headlines.
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ISM, Greece Panic Markets (UUP, XLE, GLD, DIA, SPY)
by ilene - November 1st, 2011 10:58 am
Courtesy of John Nyaradi.
A surprise decision by Greece and slowing ISM report panic global markets.
Major stock indexes (AMEX:SPY) declined today as Greek shocked the world by announcing a referendum on its austerity program which threw last week’s European agreement on the country’s debt into total disarray.
Markets reacted poorly with the yield on Greece’s 2 year note climbing north of 80% and the panic in the streets spread as Italy’s 10 Year Note climbed to a whopping 6.3%.
At home, the ISM report declined to 50.8 for October, missing expectations and indicating weakness in the all important manufacturing sector (AMEX:DIA)
The U.S. Dollar (AMEX:UUP) gained in a flight to safety while the energy sector declined (AMEX:XLE) more than 7% on fears of a global slowdown in economic activity and energy demand.
Gold (AMEX:GLD) tumbled in response to the news and the Federal Reserve starts its widely watched two day meeting as market watchers wonder what the Fed’s next move might be.
Bottom line: We have been saying for weeks that Greece and Europe are the wild cards in today’s environment. A settlement of this uncertainty will likely lead to a year end rally while ongoing chaos can only bode ill for global equities markets.
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Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
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Markets Spook On Halloween (SPY, DIA, QQQ, IWM, MF)
by ilene - October 31st, 2011 10:53 pm
Courtesy of John Nyaradi.
Markets spooked out today on Halloween as the SPDR S&P 500 ETF (AMEX:SPY), SPDR Dow Jones Industrial Average (AMEX:DIA), PowerShares QQQ Trust (NASDAQ:QQQ), and the iShares Russell 2000 Index (AMEX:IWM) all took a nose dive to end a crazy month.
The nose dive was mostly a correction related to last weeks Europe debacle; moving forward this week, it is unclear whether the rally will continue until the end of the year, or if it was just a short sigh of relief before things could get really ugly.
One thing is for certain: MF Global Holding’s (NYSE:MF) file for Chapter 11 bankruptcy is not a positive sign by any means. The bank failed for several reasons, including its purchase of European sovereign debt. I wonder how European banks are feeling today as well for purchasing European sovereign debt, it certainly wasn’t a sugar high from too much Halloween candy. Spain and Italy are likely next, proceed with caution.
Read more about how Gold ETFs and Energy ETFs were affected by the MF Global Holdings bankruptcy.
In other news, business activity reports were mixed today; reports showed slowing business in Chicago but increased manufacturing in Texas, the mixed reports being a further reminder we are not out of the woods yet. Tomorrow is a big day with an ISM report, construction spending report, and motor vehicle sales.
To continue, the Bank of Japan sold off 7 trillion Yen to slow down its currency, thus strengthening the dollar.
And lastly, G-20 leaders are set to meet this Wednesday; topics of conversation include growing the world economy and further solving the European crisis.
Global Stock Market Summary:
SPDR S&P 500 ETF (AMEX:SPY): -3.15, -2.45%
SPDR Dow Jones Industrial Average (AMEX:DIA): -2.70, -2.21%
PowerShares QQQ Trust (NASDAQ:QQQ):-1.00, -1.7%
iShares Russell 2000 Index (AMEX:IWM): -2.06, -2.71%
Happy Halloween!
Wall Street Sector Selector trades a wide variety of ETFs and positions can change at any time.
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US Dollar ETFs React To Japanese Yen Intervention (UUP, UDN, UDNT, UUPT, FXY)
by ilene - October 31st, 2011 8:38 pm
Courtesy of John Nyaradi.
US Dollar ETFs such as PowerShares DB US Dollar Index Bullish (AMEX:UUP) and PowerShares DB 3x Long US Dollar Index Futures (AMEX:UUPT) rose today against the Japanese Yen after the Bank Of Japan sold off nearly 7 Trillion Yen to weaken the currency.
The US Dollar rose significantly compared to the Japanese Yen today, and several US Dollar ETFs reacted sharply to the upward trend. The PowerShares DB US Dollar Index Bullish (AMEX:UUP) ETF rose 1.94% today, as it directly correlates to US dollar prices. Today was also a good day to be investing in the PowerShares DB 3x Long US Dollar Index Futures ETN (AMEX:UUPT), as it rose 6.09% today. This ETN tracks the US Dollar on a long position, and today’s rise created enormous wealth in this currency ETF.
The Japanese intervention, though strong, is likely to be short lived, as Japan’s Yen continues to face higher prices due its perceived perception as a safer currency then US Dollars or Euros. This “safer” currency mentality likely comes from fears about Europe and a possible Chinese bubble. (AMEX:UUP) and (AMEX:UUPT) are likely to be contenders for profitable dollar ETF trading, as long as The Bank Of Japan keeps injecting Yen into the system, and Europe remains on firm footing after last weeks debacle.
On the other side of the spectrum, PowerShares DB US Dollar Index Bearish (AMEX:UDN) and its brother ETN PowerShares DB 3x Short US Dollar Index Futures (AMEX;UDNT) reacted negatively to the dollar rising, as (AMEX:UDN) dropped nearly 2% today while (AMEX:UDNT) dropped a whopping 5.22%. Both of these ETFs track the dollar inversely, with (AMEX:UDN) and (AMEX:UDNT) shorting the market. It is likely that as the Japanese Yen recovers from the Bank of Japan’s sell off, the US dollar will fall and (AMEX:UDN) and (AMEX:UDNT) will be very profitable investments and an easier way to make money on a falling US dollar. However, if the current “fiat” currency rally continues, in which markets continue to rise on continued positive Euro and US economic sentiment, then these ETFs would be the first on the chopping block.
Lastly, the CurrencyShares Japanese Yen Trust (AMEX:FXY) ETF reacted very negatively to the Bank of Japan’s Yen sell-off, dropping nearly 3.13%. This ETF will likely rebound in the next few days as the Yen corrects its down spell, but…
MF Global Holdings Bankruptcy: Energy And Oil ETFs Suffer (USO, IYE, XLE, MF)
by ilene - October 31st, 2011 6:49 pm
Courtesy of John Nyaradi.
Energy ETFs such as the United States Oil Fund LP (AMEX:USO), iShares Dow Jones Energy Sector ETF (AMEX:IYE), and Energy Select Sector SPDR (AMEX:XLE), all slumped today on news that MF Global Holdings (NYSE:MF), a large holder of futures positions, filed for bankruptcy earlier today.
(AMEX:USO) lost nearly 1% today as oil closed at $93.19 per barrel. The loss can largely be attributed to news that MF Global Holdings (NYSE:MF), a large holder of commodities positions, filed for Chapter 11 bankruptcy today, and is no longer able to trade its holdings except for sell off purposes. The bankruptcy could trigger a massive sell-off of commodities positions, including oil holdings, which would likely put supply in control and drive down prices. The oil market reacted accordingly today, and (AMEX:USO) followed directly behind with its 1% drop.
Other energy ETFs reacted negatively today, largely due to the oil slip and MF Global Holdings (NYSE:MF) news. The iShares Dow Jones Energy Sector ETF (AMEX:IYE) dropped 4.43% today while the Energy Select Sector SPDR ETF (AMEX:XLE) plummeted 4.71%. The drops in both (AMEX:IYE) and (AMEX:XLE) are likely a reaction to lower prices because oil is such a large staple of the US and Global economies. Any drop in oil is likely to trigger a similar drop in (AMEX:IYE) and (AMEX:XLE), and the MF Global Holdings (NYSE:MF) did not help.
The slump in Energy ETFs today is also largely attributed to the rising US dollar in response to the Japanese Government’s yen intervention to hold back the Yen’s strength. Commodities, and oil in particular, generally go down as dollars go up, and so a combination of the MF Global Holdings (NYSE:MF) failure plus a dollar increase are the likely culprits for oil and energy ETFs decline.
Bottom Line: MF Global Holdings (NYSE:MF) filing for Chapter 11 Bankruptcy is a huge deal for the commodities market. One can expect Oil and Energy ETFs like (AMEX:USO), (AMEX:IYE), and (AMEX:XLE) to respond accordingly until this market irons itself out.
ETF Summary:
United States Oil Fund LP (AMEX:USO): -0.20, -0.80%
iShares Dow Jones Energy Sector ETF (AMEX:IYE): -1.84, -4.43%
Energy Select Sector SPDR (AMEX:XLE): -3.44, -4.71%
Wall Street Sector Selector trades a wide variety of ETFs and positions can change at anytime.
Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
Gold And Silver Slump On News Of MF Global Holdings Bankruptcy (GLD, SLV, MF)
by ilene - October 31st, 2011 5:43 pm
Courtesy of John Nyaradi.
Gold and Silver ETFs (AMEX: GLD), (AMEX: SLV), slumped today on news of MF Global Holdings Bankruptcy (NYSE: MF) and Stock Market Sell-Off.
Gold dropped a total of $22 today to land at $1725.20 per ounce and the SPDR Gold Trust ETF (AMEX: GLD) followed suite by shaving off 1.34% off its record setting October highs.
The sell-of for (AMEX:GLD) can largely be attributed to MF Global Holding’s filing for Bankruptcy earlier today. MF Global Holdings (NYSE:MF) has large stakes in the futures markets, and as of right now any trades made by the bank are for “liquidation” purposes, thus prompting fear that supply will rule over demand for many commodities, indicating lower prices for metals, including (AMEX:GLD).
The US dollar surge sparked by a Japanese yen-intervention today, in addition to renewed hopes that Europe finally has its fiscal house in order, also likely contributed to the drop in (AMEX:GLD) today. Gold and gold ETFs typically track inversely to currencies, and the meteoric rise in (AMEX:GLD) for October can largely be attributed to Euro fears and possible affects of any European outcome on US banks and the US dollar. Since the currencies of the world (US Dollars and Euros) seem to be stable for now, it is not surprising that (AMEX: GLD) took a dive.
Silver also slumped today, with the iShares Silver Trust (AMEX:SLV) dropping nearly 2.3% on news of the MF Global Holdings Bankruptcy and because of the dollar surge via Japanese yen intervention. Although Silver is not as much of a “reserve” currency as Gold, silver typically tracks opposite to currency movement, and thus we saw (AMEX:SLV) drop today.
Bottom Line: the MF Global Holdings (NYSE:MF) Bankruptcy likely fueled the (AMEX:GLD) and (AMEX:SLV) sell-off today because the bank has a very large presence in the commodities markets, and a sell off of these assets would likely drop prices. A US dollar rally caused by a Japanese yen intervention also likely sparked the metals sell-off.
At the end of the day, however, the drop in (AMEX:GLD) and (AMEX:SLV) put just a small dent in the metal’s overall growth for October.
ETF Wrap-Up:
SPDR Gold Trust (AMEX:GLD): -2.28, -1.34%…
Business Activity Reports Are Mixed (DIA, SPY)
by ilene - October 31st, 2011 1:12 pm
Courtesy of John Nyaradi.
Business activity reports from Chicago and Texas are mixed this morning
The October Dallas Federal Reserve Texas Manufacturing Index recorded a substantial gain to +2.3 from last month’s -14.4, indicating improving business and manufacturing activity (AMEX:DIA) in the region. This was the first positive reading in six months with employment also reaching a six month high while new orders declined.
Farther north, the Chicago PMI declined to 58.4 from last month’s 60.4, indicating slower business activity for companies (AMEX:SPY) in the region but still remained above the critical 50 level which indicates the borderline between expansion and contraction.
Tomorrow brings the widely watched national ISM report.
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Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
The Stock Market’s Monstrous Week (SPY, DIA, EFA, EWI, SLV)
by ilene - October 30th, 2011 4:50 pm
Courtesy of John Nyaradi.
As Halloween rings out a record setting October, the stock market faces a monstrous week of news and data ahead.
October was nothing, if not exciting, and November promises more of the same as this week brings a tidal wave of news and data.
At Wall Street Sector Selector, we were able to participate in last week’s euphoric relief rally and lots of factors will affect the sustainability of this rally as we head for the end of the year.
On My Wall Street Radar
chart courtesy of www.stockcharts.com
In the chart of the S&P 500 above (NYSE:SPY) we can see from the RSI that the major index is approaching overbought levels and significant resistance lies just ahead at the 1300 level. While the “death cross” is still in play, the index has closed above the widely watched 200 Day Moving Average and the 50 Day Moving Average is turning up. Significant support lies at the 1225 level.
Dow Theory (NYSE:DIA) has registered a “buy” signal with breakouts to new highs and seasonality points to the traditional strong finish to the year and the “Santa Rally.”
Overall, technical indicators point to an uptrend going into the end of the year that will depend upond holding the 200 Day Moving Average. At overbought levels, a correction to 1225 or so in the short term is a strong probability.
The Economic View from 35,000 Feet
Last week brought a blizzard of economic news, particularly from Europe, but one significant event went unnoticed behind the scenes and that is the Congressional “super committee” meetings on the budget deficit. Those meetings have continued largely in secret and as the November 23rd deadline comes onto the radar screen, this factor will come to the forefront of our attention. iShares Chief Investment Strategist Russ Koesterich offers an insightful look into what to expect in his article, “The Fatal Flaw of Deficit Reduction Efforts.”
Europe (AMEX:EFA) was the big news, of course, and, in my opinion, last week’s action did nothing more than buy some time for the Euro Zone to work their way out of this debt crisis.
In a nutshell, they boosted the leverage of the EFSF, (European Financial Security Facility) forced a 50% “haircut” on…
Unique ETF Opportunities For Unique Times
by ilene - October 29th, 2011 2:58 pm
Courtesy of John Nyaradi.
Europe has been all the news lately, along with the Euro Dollar, and volatility like this offers quick profit making opportunities in various asset classes that investors might otherwise not consider.
Exchange Traded Funds (ETFs) offer investors the ultimate in flexibility and portfolio construction by making previously unavailable asset classes easily accessible to retail investors. One of these major asset classes is Forex which, until recently, has been the domain of specialists, and traders/investors have been required to open separate accounts and trade forex as a separate segment of their investment portfolio.
However, with the advent of ETFs, investors can now get exposure to the benefits (and risks) of forex trading in traditional brokerage accounts, including IRAs and qualified defined contribution and 401k accounts.
Many investment avenues are available when using currency ETFs. One can go “long” a particular currency with standard currency ETFs or one can “short” a currency, either by shorting the particular ETF or buying an “inverse” ETF that changes value in the opposite direction of the underlying index. One can also leverage positions with ETFs that offer 2X leverage to the underlying currency’s index. Finally, ETFs that simulate the action of currency pairs are available which can replicate the trading action of the underlying forex pairs themselves.
Currency ETFs trade just like a stock and move with the underlying foreign exchange rate and offer a convenient, easy to understand way to participate in this market. While there are differences between currency ETFs and spot forex trading, ETFs offer investors several unique advantages. One example of a common forex ETF is the Currency Shares Euro Trust (AMEX:FXE). In light of the current European situation, (AMEX:FXE) last week provided investors significant gains as policymakers dodged the Greek bullet once more.
chart courtesy of www.stockcharts.com
Furthermore, you can use currency ETFs within the confines of a standard brokerage account and so all of things you’re used to with a standard stock account apply to currency ETFs. ETFs allow margin, short selling, stop loss entry and exit opportunities and reasonable commission structures. Currency ETFs also offer standard stock market margin leverage, and for more aggressive investors, options strategies on currency ETFs are available including covered calls and buying either puts or calls to amplify potential returns.
Beyond single currency ETFs, investors can also use currency pair exchange traded funds that are…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
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