ETF Outlook For Tuesday, January 28, 2014 (XLK, AAPL, UNG, SLX, PIO)

ETF Outlook for Tuesday, January 28, 2014

SPDR Technology ETF XLK

Disappointing guidance by the world’s largest technology company, Apple AAPL last night has the entire sector moving lower this morning. The stock makes up 14 percent of the ETF and is the largest holding, followed by Google GOOG at nine percent.

AAPL is currently down seven percent in pre-market trading and XLK is off about one percent. The one silver lining is that the overall stock market is higher this morning, and therefore is offsetting what could have been a major sell-off on the AAPL news.

United States Natural Gas ETF UNG

After hitting a new multi-year high last week, UNG fell by five percent yesterday as investors took profits and as the Northeast warmed up for the day. But the balmy 40-degree weather did not last long in New York and this morning the wind chill was back below zero for a large portion of the country.

The cold snap has sent the demand for natural gas higher and is leading to the commodity ETF moving higher this morning. The support level that was once the breakout area is between $23 and $23.50. So far the ETF has been able to hold above the now important support line and as long as it can hold a few more days it would be a bullish signal for the commodity.

Market Vectors Steel ETF SLX

One of the ETF’s holdings, Cliffs Natural Resources CLF is rallying 14 percent pre-market after talks about the company breaking into two hit the wires. The stock is not a major holding in SLX, only 2.5 percent, but typically this type of talk can get investors excited about competitors and help push up the entire sector.

SLX is trying to hold support at the $44 area after hitting a new multi-month low yesterday. If the ETF can rally off support, it could be setting up for a short-term bounce into next week.

PowerShares Global Water ETF PIO

The niche ETF has taken a beating the last three trading days after hitting a new high last Wednesday. The selling may take a break today after one of the ETFs top holdings, Pentair PNR, reported better than expected numbers on the top and bottom line. The stock is thinly traded pre-market, but indications are that it will open higher when the bell rings.

The water sector has a solid future with clean water becoming a larger issue around the world and PIO gives investors global exposure to the niche sector. If the ETF can hold support at the $22 area it would be a bullish technical signal.