ETF Watchlist for May 4, 2016

iShares US Medical Devices (IHI)
iShares US Health Providers (IHF)
iShares Nasdaq Biotechnology (IBB)
SPDR Pharmaceuticals (XPH)

The biotechnology and pharmaceutical ETFs may test 2016 lows in May if the S&P 500 Index continues its trajectory. The volatile biotech sector is about 8 percent above its 52-week low today following last week’s earnings miss at Gilead (GILD). Regneron (REGN) and Celgene (CELG), two more top holdings in many biotech funds, are also near 2016 lows. The outlook for the sector is still strong over the long-term – buying on any weakness would be prudent.

SPDR S&P 500 (SPY)
iShares Russell 2000 (IWM)
S&P Midcap 400 (MDY)
PowerShares QQQ (QQQ)
SPDR S&P Dividend (SDY)

The Nasdaq-100 Index, tracked by QQQ, is clearly struggling, as evidenced in the year-to-date performance chart below. Mid-April’s slump and continued into last week with Apple’s (AAPL) disappointing earnings.

SDY continued to outperform the broader market over the past week as interest rates edged lower.

WisdomTree Bloomberg USD Bullish (USDU)
CurrencyShares Euro Trust (FXE)
CurrencyShares British Pound (FXB)
CurrencyShares Canadian Dollar (FXC)
CurrencyShares Japanese Yen (FXY)
WisdomTree Emerging Market Currency (CEW)

Commodity currencies such as the Canadian dollar and Australian dollar saw a sharp correction this week following a surprise rate cut by the Australian central bank. Slow growth and inflation, as well as a China’s lower-than-expected manufacturing report contributed to the trends. The Chinese yuan also was set lower against the U.S. dollar on Wednesday. Both the yen and euro advanced during the week.

U.S. Dollar Index edged below its trading range, but a rebound in the week ahead would re-establish that range. A rally versus the euro or a continuation of the trend from Tuesday and Wednesday would be short- and intermediate-term bullish.

SPDR Energy (XLE)
FirstTrust ISE Revere Natural Gas (FCG)
Global X Copper Miners (COPX)
Market Vectors Coal (KOL)
Market Vectors Steel (SLX)

Oil prices pulled back over the past week and a U.S. dollar rally on Tuesday and Wednesday weakened commodities. China’s futures market surged last month. Its statistics bureau has stopped reporting some commodities data amid a corruption investigation as well, casting doubt on the legitimacy of the moves.

SPDR Utilities (XLU)
SPDR Pharmaceuticals (XPH)
SPDR Materials (XLB)
SPDR Consumer Staples (XLP)
SPDR Consumer Discretionary (XLY)
SPDR Healthcare (XLV)
SPDR Technology (XLK)
SPDR Financials (XLF)
SPDR Retail (XRT)

Energy and materials pulled back as commodities took a breather, the miss at Apple (AAPL) weighed on tech. Utilities and consumer staples fared better as the overall stock market drifted lower on the week.

Housing data remains positive and the first quarter GDP reported 14.8 percent residential fixed-asset investment, the fastest growth since the fourth quarter of 2012.

iShares iBoxx High Yield Corporate Bond (HYG)
iShares iBoxx Investment Grade Corporate Bond (LQD)

Credit risk was slightly elevated over the past week, sending high-yield bonds lower. Investment grade bonds traded sideways, as lower treasury yields pushed investors into higher yielding corporate bonds.

First Trust Dow Jones Internet (FDN)

The decline in technology shares over recent weeks has been narrowly concentrated in a few blue chips. The Internet sector did far better, fueled by strong earnings at Facebook (FB) and Amazon (AMZN). FDN outperformed QQQ by more than 5 percent over the past three weeks.

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