Was The Greek Bailout Priced In?

by on March 12, 2012 | ETFs Mentioned:

After back-and-forth price action throughout most of last week, equity indexes managed to end on a high note as good news from the Greek debt swap deal restored confidence in the debt burdened currency bloc. Bullish euphoria has remained strong on Wall Street thanks to an overwhelming majority of better-than-expected economic data releases in 2012. With Euro zone woes off the table, at least for now, investors can once again turn their attention to fundamental developments on the home front. 

Weekly Outlook

The coming week will feature a host important domestic data, including retail sales, an FOMC meeting, as well as a CPI release to end the week. 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): The U.S. retail sector could become the center of attention on Tuesday depending on how investors react to the latest data release. Analysts are expecting for February retail sales to have grown by 1.2%, versus the previous reading of 0.4%. 
  • PowerShares DB USD Index Bullish (UUP): The U.S. Federal Open Market Committee is slated to announce its decision regarding interest rates on Tuesday, which may lead to volatile trading for the U.S. dollar in the currency market. Investors will pay close attention to the economic commentary issued after the decision itself.
  • Rydex CurrencyShares Japanese Yen (FXY): The Japanese yen could also experience volatile trading after the Bank of Japan interest rate decision. While the rate is largely expected to remain unchanged at 0.10%, investors will still pay close attention to the economic commentary issued after the decision itself. 
  • iShares MSCI EMU Index Fund (EZU): Equities in the Euro zone will steal the spotlight on Wednesday as investors react to the latest inflation data from the region. Analysts are expecting for CPI to come in at 2.7% year-over-year in the currency bloc. 
  • Rydex CurrencyShares Swiss Franc Trust (FXF): The Swiss National Bank rate decision could lead to increasing trading volumes for FXF on Thursday. Investors will look for insightful commentary from the European powerhouse following the rate decision itself. 
  • SPDR Gold Trust (GLD): U.S. CPI data will hit the street on Friday, which could spark a trading frenzy in the gold futures market. If inflation comes in weaker-than-expected, GLD could find itself in a battle to keep afloat. Analysts are expecting for CPI to come in at 0.5% versus the previous reading of 0.2%.

Wall Street has been on a tear as news from both sides of the Atlantic have been optimistic. However, domestic equities, as represented by the S&P 500 Index, are already up 10% year-to-date, leading many to believe that a pullback is imminent. 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 XME 

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Disclosure: No positions at time of writing.