ETF Watchlist for April 20, 2016

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

UnitedHealth Group (UNH) reported strong earnings and revenue growth in the first quarter. UNH also announced this week it will no longer offer policies on government exchanges in most states, a move that will save the company as much as $1 billion.

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

The S&P 500 Total Return Index, which includes dividends, broke to a new all-time high last week, reflected in SPY. A move to a new high on the price index will bring short-covering and also end the trading range seen over the past two years. The S&P 500 needs to clear 2125 in order to reach a new high. The DIA and the Dow Industrial Average show a similar breakout in the total return index, but not the price index.

SPDR S&P Dividend (SDY), a fund we favor, continues to track with the S&P 500 Index.

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)

The U.S. dollar remains in its trading range and will likely bounce off the low of this range due to central bank policy shifts. The Bank of Japan may increase asset purchases at the next meeting and yen strength has been a major factor in U.S. dollar weakness the past few weeks.

Emerging market currencies have stayed strong with rising oil prices.

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

OPEC did not cut production and oil prices initially fell on Monday, but the market remains structurally bullish. The current move may also be a short-squeeze, since some traders bought protection ahead of the oil meeting. Oil flirted with $45 a barrel today, and a move above opens up a run towards $50 as shorts are taken out. On the downside, support is at $40 and $35 a barrel.

Steel has been the most interesting commodity sector. Protectionist tariffs against China have lifted the price of steel in the U.S. and other countries, which is good for domestic steelmakers. China has responded by increasing its production even further, which is stirring up talk of more tariffs.

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)

Netflix (NFLX) and International Business Machines (IBM) tumbled after reporting earnings this week, causing the technology sector to lag the overall market. The spike in oil over the past three days has led to a strong rally in energy and material shares. Whether this commodity rally lasts may rest on China: the country announced it is shifting monetary policy following an alarming rise in debt and home prices over the past month.

The homebuilding sector has plodded along steadily over the past few years and strong earnings reports in March increased optimism for the sector. New building permits were below expectations in March, while existing home sales were higher than expected.

The industrial sector is one to keep an eye on in the next week as it approaches a new all-time high. It would join utilities, consumer staples and telecom in trading at new all-time highs in 2016.

Investment banks, and mega banks with investment banking divisions have reported lower earnings growth due to weakness in the trading and investment banking divisions. However, the banks reported strong lending growth, which is positive for the overall banking sector. IAI has underperformed the broader financial sector represented by XLF, which in turn has underperformed the regional banking sector covered by KRE.

(Sectors chart)

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

LQD only rested for a few days before resuming its steep ascent. Buying of investment grade corporate bonds has been taking place despite the rise in treasury yields, which suggests improving credit conditions.

Oil prices will weigh on Fed officials; if oil climbs to $50 a barrel and stays there, headline inflation which is running near 0 percent annually will quickly converge with core inflation, which is running above 2 percent, well into the Fed’s target range.

SPDR Gold Shares (GLD)
Market Vectors Gold Miners (GDX)

On Tuesday, bullish traders in the silver market squeezed the bears, leading to triple normal trading volume and a bullish breakout in silver. The vertical move in silver this month is unsustainable, but it may not top out until around $18 an ounce or about $17.50 for SLV. Gold mining shares have rallied along with the silver miners, but gold itself has been relatively muted compared to silver.

First Trust Dow Jones Internet (FDN)
PowerShares Nasdaq Internet (PNQI)

Internet stock performance mirrored that of the broader S&P 500 Index. Amazon’s (AMZN) decision to take on Netflix (NFLX) in streaming dealt a large blow to Netflix and resulted in a net negative for Internet ETFs. Netflix also reported earnings this week, and weaker-than-expected guidance led to a decline in the stock.

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