Investors returned to Wall Street in a buying mood Tuesday morning following the long weekend in observance of President’s Day. European markets kicked off the week on a sour note after elections in Italy sent waves of worry across the currency bloc, however, this wasn’t enough to spook the bulls from returning to the home front. Major equity indexes are continuing their ascent thanks to M&A activity fueling confidence after advanced merger talks between OfficeMax and Office Depot hit the street [see also How To Take Profits And Cut Losses When Trading ETFs].
Below, we highlight ETFs that may see an increase in trading activity as relevant market data is released and evaluated by investors:
- SPDR Homebuilders ETF (XHB, A+): This sector ETF could see an uptick in trading activity after housing starts data comes out tomorrow morning. Analysts are expecting for the latest figure to come in at 914,000 versus last month’s reading of 954,000.
- Barclays TIPS Bond Fund (TIP, A): Safe haven asset classes will come into the spotlight Wednesday morning as investors digest the latest inflation reading. Analysts are expecting for U.S. CPI to come in at 1.6% versus last month’s reading of 1.7%.
- MSCI Germany Index Fund (EWG, B+): German equity markets will likely takes cues from the latest GDP report on Friday morning. Analysts are expecting for the European powerhouse to post quarterly growth of 0.4%, unchanged from the previous reading.
- Canada Bond Index Fund (CAD, B): Canadian bonds could see volatile trading Friday morning after the latest CPI data hits the street. Analysts are expecting for Canada’s inflation rate to come in at 1.1%, unchanged from the previous reading.
From a technical perspective, the investment landscape has remained largely unchanged over the past few weeks; equity markets remain in a strong uptrend and the probability for a correction grows by the day. The scene looks the same as it did a few weeks ago from a fundamental perspective as well, as the string of upbeat economic reports continues to bolster confidence. Every minor pullback on Wall Street has welcomed buyers in the face of technical indicators signaling “overbought” conditions. As such, the trend remains our friend, and we continue to look for bullish opportunities with manageable downside risk.
Below, we have highlighted three 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 EMB
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Disclosure: No positions at time of writing.