Opportunities In A Pullback

by on April 30, 2012 | ETFs Mentioned:

U.S. stocks staged an impressive recovery last week as major indexes held above key technical resistance levels, 1,360 for the S&P 500 Index, bolstered by upbeat earnings results. Investors also reacted positively following the latest FOMC announcement which reaffirmed the Fed’s commitment to keeping interest rates low until late 2014. Confidence in the domestic recovery is growing judging from the positive reaction on Wall Street after last Friday’s GDP report [see also Free Report: How To Pick The Right ETF Every Time].

Weekly Outlook

Below, we highlight ETFs that may see an increase in trading activity as relevant market data is released and evaluated by investors:

  • SPDR S&P Retail ETF (XRT): This ETF could see an increase in trading volumes on Monday as the retail sector reacts to the latest consumer spending data; analysts are expecting for this figure to come in at 0.3% versus the previous reading of 0.8%
  • IQ Canada Small Cap ETF (CNDA): The Canadian GDP report due for release on Monday morning way spark a volatile trading session for this ETF; analysts are expecting for economic growth to come in unchanged from the previous reading of 1.7%.
  • PowerShares Dynamic Building & Construction Portfolio (PKB): This sector-specific ETF may see an increase in trading volumes following the release of the latest construction spending data on Tuesday; analysts are expecting for this figure to come in at 0.4% versus the previous reading of negative 1.1%.
  • Global X Auto ETF (VROM): Automotive stocks could be in for a busy trading day on Tuesday given the release of the latest motor vehicles sales report; analysts are expecting for auto sales in April to come in at 14.4 million.
  • CurrencyShares Euro Currency Trust (FXE): The euro could encounter some headwinds in the currency market on Thursday following the latest European Central Bank rate decision; economic commentary following the decision itself will be important as analysts are largely expecting for the interest rate to remain unchanged at 1%.
  • S&P 500 VIX Short-Term Futures ETN (VXX): This popular volatility ETP could be in for a wild trading day on Friday depeding on how investors react to the latest employment report; analysts are expecting for the unemployment rate to remain at 8.2% with 193,000 nonfarm payrolls added during the month of April.

Following a string of better-than-expected economic data releases earlier in the year, choppy trading in April served as a great reminder that the recovery remains fragile and steady. Looming Euro zone debt woes continue to plague investors’ confidence, however, upbeat earnings results across the board at home are helping to sustain optimism. 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: Long EDV 

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Disclosure: No positions at time of writing.