Markets were in for several volatile trading sessions last week as investors digested mixed economic reports and the latest minutes from the Fed. The central bank announced that it will continue purchasing $85 billion a month of mortgage-backed and Treasury securities, as they feel the larger economic landscape still possesses several red flags. The minutes also showed that policymakers remain divided on the central bank’s exit strategy, leaving many speculating whether or not the Fed will scale back or completely end its stimulus measures earlier than expected. This week, investors will once again see a slew of economic reports. Below, we outline three ETFs that should see a fair amount of activity during the week ahead [see also 7 Simple & Cheap ETF Model Portfolio]:
1. S&P 500 VIX Short-Term Futures ETN (VXX, B+)
Why VXX Will Be In Focus: When it comes to measuring the level of uncertainty in the United States, no fund is as prolific as VXX. Investors should keep a close eye on this fund throughout the week, as Fed Chairman Ben Bernanke testifies on the Semiannual Monetary Policy Report before the Senate Banking Committee on Tuesday and Wednesday. Any commentary from the Chairman concerning the Fed’s stimulus exit strategy plans will like lead to some volatile trading [see also 17 ETFs For Day Traders].
2. Industrial Select Sector SPDR ETF (XLI, A)
Why XLI Will Be In Focus: This fund seeks to replicate the performance of the U.S. industrial sector and will be in focus this week as U.S. durable goods for the month of January are slated to come out on Wednesday. The number for core durable good orders, which excludes transportation items, is expected to come in at 0.4% compared to the previously reported 1.0% uptick. The number for all durable goods orders is estimated to contract by 4.2%. Investors should also keep a close eye on this fund on Friday as U.S. ISM Manufacturing is reported.
3. MSCI Canada Index Fund (EWC, B-)
Why EWC Will Be In Focus: With nearly $4.9 billion in total assets, this ETF is by far the most popular fund offering exposure to the Canadian equity market. Its focus will come at the end of the week as Canada’s GDP is slated to be announced on Friday. Analysts expect a contraction in m/m GDP of -0.1%, compared to the previous reading of a 0.3% uptick [see also How To Pick The Right ETF Every Time].
Disclosure: No positions at time of writing.