Will Economic Data Derail The Bull Train?

by on February 27, 2012 | ETFs Mentioned:

Stocks tacked on gains last week although trading activity on Wall Street was quite muted considering all of the encouraging economic data releases. Indexes ended the week on a high note after a better-than-expected consumer sentiment figure, which bolstered investors’ confidence. The real challenge comes this week however, as investors prepare to digest several key manufacturing reports at home, including GDP on Wednesday.

Weekly Outlook

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

  • iShares MSCI Germany Index Fund (EWG): The German Consumer Price index is slated to come on Tuesday, bringing the spotlight onto the popular EWG. This ETF may experience volatile trading depending on the results; analysts are expecting the German consumer price index to remain unchanged at 2.1%.
  • State Street Industrial Select Sector SPDR (XLI): This ETF may experience some volatility on Tuesday as the latest U.S. Durable Goods Orders is released. Analysts forecast a drop in durable goods orders to -1.0%, versus the 3.0% last month.
  • State Street SPDR Gold Trust (GLD): This ETF could see an increase in trading volume as the U.S. Gross Domestic Product is scheduled to be reported on Wednesday. Depending on the data, gold prices could rally if the report comes in worse than expected; analysts are expecting U.S. GDP to remain unchanged at 2.8%.
  • iShares FTSE China 25 Index Fund (FXI): Volatility could strike on Thursday as investors digest the newest China PMI Manufacturing data. Analysts are expecting an increase to 50.8 from the previous 50.5 reading.
  • First Trust NASDAQ Global Auto Index Fund (CARZ): This ETF could experience an increase in trading volumes on Thursday as investors react to the latest motor vehicle sales data. Analysts are expecting for sales to decrease by 200,000 to 14 million, versus last month’s reading of 14.2 million.
  • PowerShares S&P SmallCap Consumer Discretionary Portfolio (PSCD): Consumer discretionary stock will be under the spotlight on Thursday following the latest consumer spending data. Analysts are expecting for the figure to come in at 0.4% versus last month’s reading of 0%.

The bulls on Wall Street will look to continue their stampede this week, although lingering Euro zone woes could resurface as they have infamously done so in the past. 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 IYR

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Disclosure: No positions at time of writing.