ETF Outlook For Friday, March 14, 2014 (EWG, XLU, FXY, ENZL)

ETF Outlook for Friday, March 14, 2014

iShares MSCI Germany Index ETF EWG

The European ETFs took a beating Thursday with the regions top economy leading the sell-off. EWG closed lower by 2.9 percent, its biggest one-day drop this year. The situation in Ukraine has slowly been getting worse and this has led to investors selling stocks in the region.

The ETF has now moved to a level that bears watching. The 2014 low of $29.31 that was hit in early February could prove to be support and an opportunity for the ETF to bounce. However, if the news headlines remain negative it could have the ETF breaching the important support level.

SPDR Utilities ETF XLU

Other than the gold mining stocks, the only sector that was able to close in the green yesterday was the utility stocks. XLU finished with an impressive gain of 1.0 percent on heavy volume. The closing price of $40.70 was the best level for the ETF in ten months. Money was flowing into the sector for two reasons.

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First, the utilities are seen as a defensive sector when money is flowing out of perceived high-risk sectors. Then there is the yield factor. Most utilities pay above-average dividends and as interest rates on bonds fall it makes the yields on the stocks more attractive.

Rydex CurrencyShares Japanese Yen ETF FXY

The currency that has been held down by the actions of the Bank of Japan the last year rallied yesterday on the unrest in the Ukraine. Prior to the manipulation by the Bank of Japan the yen would act as a currency of safety when geopolitical events or market sell-offs hit the headlines.

Apparently that strategy is back as money was flowing into FXY at a rate not seen since June of last year. The move will likely be short-lived as there is significant resistance at $97 and the ETF closed at $96.07 yesterday.

iShares MSCI New Zealand Investable Market ETF ENZL

One of the few bright spots around the globe yesterday was the action in ENZL, which closed at the best level since it began trading in 2010. The gain of 0.8 percent was 190 basis points better than the S&P 500 for the day. On Thursday the Reserve Bank of New Zealand raised interest rate by 25 basis points to 2.75 percent.

It was the first major developed country to increase interest rates since the U.S. began its tapering late last year. The bank decided on the move due to a surge in economic growth that has been driven by soaring dairy exports and a construction boom.