ETF Watchlist For February 11, 2014

The following are several ETFs you may want to add to your watch list this week.

First Trust Nasdaq Technology Dividend Fund – TDIV

iShares N.A.  Multimedia Networking Fund – IGN

Cisco reports earnings on Wednesday and the stock makes up more than 8 percent of these two ETFs.  Cisco is expected to earn 46 cents per share in the coming quarter, down almost 10 percent from last year. Revenue of $11 billion is expected to be down 9 percent. A further miss could drag the stock, along with TDIV and IGN, lower.

Cisco is trading below its 200-day moving average, though its 50-day moving average has turned upward, the first positive turn since late summer. Cisco is also right near its peak for 2014. Based on the chart, the evidence favors a slightly bullish take for a technical perspective.  However, weakness in China and emerging markets, wholly aside from continued anger over the NSA spying scandal, leaves a slightly bearish take on fundamentals outlook for now.

 iShares Nasdaq Biotechnology – IBB

Healthcare funds are doing well generally.  Biotechnology remains the most important sector to watch because it sits less than 3 percent away from an all-time high. A broad stock market correction is extremely unlikely if the high-fliers of the previous rally are hitting new highs. Additionally, strength is broad across the sector: pharmaceutical and general healthcare ETFs are also on the cusp of hitting new highs.

iShares U.S. Industrials – IYJ

Bulls and bears will also focus on sectors that are struggling in 2014. IYJ sits below its 50-day moving average, which is also turning negative. Very short-term momentum signals indicate the fund could be turning a corner though, and a move above $98.50 is possible.

IYJ is in better shape than SPDR DJIA (DIA), which bounced off its 200-day moving average and has farther to go just to hit its 50-day MA, but where IYJ goes, DIA will follow.

iPath Dow Jones-UBS Copper – JJC

Dr. Copper is the predictor of booms and busts in the economy. The metal rallied in late 2013 on positive sentiment surrounding the U.S. economy, then subsequently plunged in  2014 on emerging market weakness.

Copper has bounced in February, but the metal remains in a general downtrend that began in early 2011. The key support level is $3.00 per pound, or about $37.50 for JJC. Right now, there’s actually more room for copper to run to the upside, but a move as high as $4 would still not signal a bull market, since copper was trading for $4.60 per pound in early 2011. On the downside, it will take a lot of negativity and selling pressure to break $3, something that’s unlikely to occur unless we see the conditions of January repeated.

That $3 level is very strong and will be hard to break, but were it to break, copper could fall a very long ways. For this week, we’ll simply watch to see if the metal can rally along with the rest of the markets.

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