Bullish euphoria bolstered equity markets higher last week as better-than-expected economic data stole the headlines. Investors were more than happy to see a big jump in consumer confidence as well as an encouraging GDP report, both of which boosted confidence in the recovery. The biggest surprise on Wall Street was Ben Bernanke’s testimony before Congress; the Fed Chairman sparked volatile trading after he gave no indication that there would be an additional round of quantitative easing like many had anticipated [see Gold Hits Resistance, Time To Worry?]. Several key economic data releases from all over the globe as well as ongoing developments in the debt burdened Euro zone will likely dominate the headlines this week.
The unemployment report will take center stage at home on Friday, while earlier in the week investors will also digest the latest European Central Bank rate decision. Below, we highlight ETFs that may see an increase in trading activity as relevant market data is released and evaluated by investors:
- Rydex CurrencyShares Australian Dollar Trust (FXA): The Aussie dollar could come under pressure on Tuesday depending on the economic commentary issued after the Reserve Bank of Australia rate decision; analysts are expecting for interest rates to remain unchanged at 4.25%.
- iShares MSCI EMU Index Fund (EZU): This Euro zone ETF could experience volatile trading on Tuesday if worries resurface depending on the latest GDP report from the currency bloc; analysts are expecting for economic growth to come in at 0.7% on a year-over-year basis.
- iShares MSCI Australia Index Fund (EWA): This Australian equity ETF will come into focus on Wednesday morning as investors react to GDP results from the night before; analysts are expecting for economic growth to come in at 2.3% on a year-over-year basis.
- Precidian MAXIS Nikkei 225 Index ETF (NKY): This ETF could experience an increase in trading volumes on Wednesday depending on the latest Japan GDP report; analysts are expecting for annualized economic growth to come in at -0.6%.
- Rydex CurrencyShares Euro Currency Trust (FXE): The Euro may find itself in another trading frenzy depending on how markets react to the latest central bank decision from the currency bloc; the rate is expected to remain at 1%, although the economic commentary following the rate decision itself will provide more valuable insights.
- Charles Schwab U.S. Broad Market ETF (SCHB): U.S. equity markets will likely take cues from the latest employment report due out on Friday morning; analysts are expecting for the unemployment rate to remain unchanged at 8.3%.
The coming week is stacked with economic data releases from all over the globe; investors will look to compelling fundamental data for encouragement to jump aboard the bull-train. Greek woes could throw off momentum towards the end of the week as bailout negotiations heat up once again surrounding the bond exchange overseas which is set to expire on Thursday. Below, we have highlighted three 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: Short XLB
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