Will Holiday Cheer Be Enough?

by on December 19, 2011 | ETFs Mentioned:

Euphoria was quick to evaporate from the markets last week as investors fretted over ongoing uncertainty in the Euro zone. Selling pressures prevailed across equity markets as lawmakers have yet to outline a comprehensive plan of action for restoring stability to the debt burdened currency bloc. Gold futures tanked as investors took profits in the yellow commodity, sinking its price down to $1,562 an ounce, and further tainting the precious metal’s safe haven reputation [see Are Gold ETFs The Best Defense Against Euro Drama?]. This week we outline three actionable short-term trade ideas as we expect for the roller coaster ride to continue as investors scramble to make bets and take profits before the holiday weekend.

Weekly Outlook

The coming week will be stacked with economic data releases at home and on the international front. Below, we highlight ETFs that may see an increase in trading activity as relevant market data is released and evaluated by investors:

  • CurrencyShares Canadian Dollar Trust (FXC): FXC may experience some volatility on Tuesday as the report of the Canadian Consumer Price Index  is released. Investors will watch currency movements as they digest any changes from the previous CPI of 2.9%
  • CurrencyShares Japanese Yen Trust (FXY): The Bank of Japan will release its bank rate decision on Wednesday, announcing any changes from the current 0.1% rate. FXY may see an increase in trading volume as investors wait for economic commentary to be released after the rate decision.
  • MSCI New Zealand Investable Market Index Fund (ENZL): New Zealand GDP data will be released Wednesday and is expected to increase significantly from 1.5% to 2.2%. ENZL will likely see an increase in trading volume as investors get a better idea of the country’s economic condition.
  • SPDR S&P 500 ETF (SPY): Analysts are expecting the U.S.’s GDP to remain the same at 2.0%. SPY will likely experience an increase in trading volume on Thursday as investors digest the latest report on the country’s economic recovery. 
  • Dynamic Retail ETF (PMR): U.S. consumer spending data is expected to rise to 0.3% from a previously reported 0.1%. PMR is likely to experience some volatility on Friday as investors digest how the consumer spending was affected by the ongoing economic uncertainty.
  • SPDR Homebuilders ETF (XHB): Analysts are expecting U.S. new home sales to rise from 307,000 to 315,000. XHB will likely see an increase in trading volume as investors digest the latest reports on the real estate industry. 

Market conditions are expected to be ripe with volatility for short-term traders as uncertainty in Europe sparks rallies and sell-offs as the year draws to a close. Investors should keep an eye on U.S. economic data as long-term opportunities at home are sure to arise amidst the panic stemming from overseas. Below, we have highlighted some technical trading ideas for the upcoming week. Note that most of these recommendations require active management as they are only relevant for a very short period of time. As always, investors of all experience levels are advised to use stop-loss orders and practice disciplined profit taking techniques.

Actionable ETF Idea #1: Long GDX

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