Economic data managed to put a dent in investors’ confidence over the weekend after Chinese GDP data came in weaker-than-expected; the Asian powerhouse posted economic growth of 7.7% in the first quarter, falling short of the expected 8% reading as well as the previous figure of 7.9%. The continued sell-off in the precious metals market remains on everyone’s radar screen as gold futures have plunged below the $1,400 an ounce level, opening up the doors to harsh selling pressures as key technical levels have been breached [see also ETF Call And Put Options Explained].
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 ETF could be in for a volatile day tomorrow as investors digest last month’s housing starts data. Analysts are expecting for this figure to come in at 933,000 versus last month’s reading of 917,000.
- Industrials ETF (VIS, A+): Industrial stocks will come under the spotlight later in the day tomorrow as industrial production data hits the street. Analysts are expecting for this reading to show a slowdown in industrial production for March; it is expected to be a .2% gain vs. February’s .8% gain.
- DB USD Index Bullish (UUP, A): The U.S. dollar will look to resume its rally this week, although Tuesday’s Consumer Price Index report could create headwinds for the greenback. Analysts are expecting for inflation to come in at 1.6%, marking a modest drop from last month’s reading of 2.0%.
- CurrencyShares Canadian Dollar Trust (FXC, A-): The loonie may swing wildly in the currency market this coming Wednesday as the Bank of Canada interest rate decision is slated to take place. Analysts are expecting for the rate to remain steady at 1.00%, although economic commentary following the rate decision itself could spur volatile trading.
The uptrend on Wall Street remains largely in-tact from a technical perspective as pullbacks remain short-lived and dips are still seen as buying opportunities. Economic data releases largely continue to come in above expectations, which is resonating well on the equity front, although the volatile sell-off in the gold market coupled with any big earnings report misses this week could rattle confidence and inspire profit taking across the board. For the S&P 500 Index, support comes in at 1,540-1,520, while resistance lies around the 1,600 level.
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: Short IYT
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Disclosure: No positions at time of writing.