ETF Outlook For Thursday, May 22, 2014 (FXI, XLU, KWEB, PALL, JD)

ETF Outlook for Thursday, May 22, 2014

iShares FTSE/Xinhua China 25 ETF FXI

The ETF is up in pre-market trading after China reported a flash PMI reading of 49.7, above last months reading and well above estimates. Even though a reading under 50.0 is considered contraction territory, the number is at the best level in five months.

It appears that stimulus from the Chinese government is finally starting to play a role in the manufacturing sector. Investors cheered the news and pushed stocks in the region higher. FXI has been in a trendless pattern for the majority of 2014, but it is set to open at a one-month high this morning.

Look for a rally to the $37 area before it hits a new resistance level.

SPDR Utilities ETF XLU

After leading the sector ETFs in performance for the year, the ETF began to pull back last month and is now trying to find some support.

See Also: Catching Up With The BRIC ETFs

The 5 percent sell-off in the ETF has pushed its RSI reading to the lowest since last December, suggesting XLU is extremely oversold. On the flip side, XLU has closed below the 50-day moving average for three consecutive days for the first time since January.

Nonetheless the last two days the ETF has been able to close well off the intraday lows, which is a bullish signal. The odds are that XLU should be set to bounce in the coming days and continue the uptrend.

KraneShares China Internet ETF KWEB

Shares of the ETF were up another 1.23 percent yesterday and are now trading at a three-month high. Today the ETF should be on the move again as Chinese e-commerce behemoth JD.com JD begins trading today in the U.S.

The company is valued at $25.7 billion. Even though the stock will not be a component of KWEB or the other Chinese Internet ETFs immediately, the action in the stock today will affect its peers directly and therefore KWEB and its competitors.

ETFs Physical Palladium ETF PALL

Shares of PALL, which trades the futures price of palladium, closed at the best level in nearly two years yesterday and are now up 16 percent for the year.

The rally can be attributed to a strike in South Africa that has threatened supply, as well as potential sanctions on Russia, which is the number one supplier of palladium in the world. While these situations could end in the near future, the chart of PALL is bullish and using the ETF to play current rise in the price of the metal is strategy investors should consider.