ETF Outlook for Tuesday November 12, 2013 (GREK, XRT, SKYY, REM)

ETF Outlook for the Tuesday, November 12, 2013

Global X FTSE Greece 20 ETF GREK

The Greek ETF (GREK) was highlighted in a recent Index Universe article stating how “cheap” the shares are today. According to their numbers the ETF is trading with a trailing P/E ratio of 1.0. What this means is that an investor is paying $1 for every dollar of earnings. To put this into perspective, the historical P/E ratio on the S&P 500 is approximately 15.0. And the next lowest trailing P/E in the world of ETFS is 5.6 for the iShares MSCI Russia Capped ETF ERUS.

Could GREK be the bargain of a lifetime even after a 22 percent rally this year? Or is it one of the biggest value traps ever? It appears that GREK could be a diamond in the rough as long as the country does not regress on its slow progress towards becoming a healthy economy again.

SPDR S&P Retail ETF XRT

The markets traded in one the tightest trading ranges of the year yesterday with volume well below average. The Veterans Day holiday was a big reason for the lack of interest in stocks. However, one sector was able to collect some buyers as it rallied to a new all-time high with a gain of 1 percent. XRT closed at the best level ever and near the high of the day as it was led higher by big moves in Sears Holding SHLD and Francesca’s Holdings FRAN. All signs are pointing towards a decent holiday shopping season, which would be a major catalyst for the sector.

First Trust Cloud Computing Index ETF SKYY

The ETF had a good day yesterday, gaining 0.5 percent and closing a penny off the high of the session. Today may not be so kind to SKKY after its number six holding reported earnings last night after the bell. Rackspace RAX beat slightly on revenue, but EPS for the quarter came in at $0.11, 4 cents below the estimates. The stock immediately fell by 8 percent after the news was released. The stock only accounts for 4 percent of the ETF, but this could be a situation where it brings down the entire niche sector.

iShares FTSE NAREIT Mortgage REITs Index ETF REM

One of the rare ETFs to trade on above average volume and make a big move yesterday was REM. The ETF closed down 1.3 percent to the lowest level in nearly three months. The ETF’s top holding, Annaly Capital Management NLY, lost another 2.6 percent and closed at the lowest level since 2001. With NLY making up 16.4 percent of the portfolio the outlook does not look good for the ETF. Some bad decisions from management have investors fleeing NLY and at the same time sending REM close to a multi-year low.