Three ETFs to Watch This Week: EIS, TIP, GDX

by on February 15, 2010 | ETFs Mentioned:

Last week saw impressive volatility in equity ETFs, as investors focused their attention squarely on the debt crisis of Greece and the reaction of wealthy euro zone neighbors. While Wall Street will continue to monitor any developments in the region going forward, there are a number of major events ahead this week that could have a big impact on markets. The U.S. earnings season has begun to wind down, but some major overseas announcements could have a big impact on a handful of funds. Below is a look at three ETFs that could be on the move this week amidst a flurry of earnings reports, data releases, and continued evaluation of the euro zone’s strength:

MSCI Israel Capped Investable Market Index (EIS)

Why EIS Could Be On The Move: Teva Pharmaceuticals, which accounts for about 22.5% of the fund, is reporting earnings on Tuesday.

What To Watch For: Teva Pharmaceutical is one of the largest generic pharmaceutical companies in the world, and is expected to report earnings of $0.95 per share on revenues of $3.81 billion. Many analysts are bullish on generic pharmaceutical manufacturers over the next decade as many high-profile proprietary drug patents expire. Meanwhile, an interesting trend has emerged in the sector: name-brand drugmakers are paying generic makers to delay competition from cheaper alternatives, which has helped produce higher margins in some cases. Both of these trends could be good news for Teva. EIS is already up more than 70% over the last year, and solid earnings from Teva could give it a further boost.

iShares Barclays TIPS Bond Fund (TIP)

Why TIP Could Be On The Move: Consumer Price Index data for January is scheduled to be released at 8:30 am (EST) on Friday.

What To Watch For: In the data released in January, the CPI for urban consumers rose 0.1% putting the index at an increase of 2.7% over the past 12 months. Inflation has been on the minds of investors lately, as concerns over the intermediate-term impact of the massive stimulus plans implemented last year have popped up. A material uptick in inflation could increase the likelihood of an interest rate hike sooner rather than later, so Friday’s release will be analyzed very carefully.

There’s no silver bullet for protecting assets against inflation, but TIP generally performs well in inflationary environments since its principal value is tied to CPI. But TIP isn’t the only “inflation-proof” ETF: see Beyond TIP: 10 ETFs To Protect Against Inflation for a look at other ETFs that might be in focus following Friday’s data release.

Market Vectors Gold Miners ETF (GDX)

Why GDX Could Be On The Move: Barrick Gold Corp, the largest holding for GDX at more than 16% of the fund, has a quarterly earnings report due on Thursday.

What to watch for: Following a solid earnings report from mining giant Rio Tinto last week, all eyes will be on Toronto-based Barrick to match lofty expectations. After rising for much of last year, the price plummeted in December as the dollar strengthened. Since Barrick is the largest pure gold miner in the world, Thursday’s earnings should reflect the general outlook for the entire industry.

Disclosure: No positions at time of writing.