ETF Outlook For Wednesday February 19, 2014 (IHE, BJK, TLT, KWEB)

ETF Outlook for Wednesday February 19, 2014

iShares U.S. Pharmaceutical ETF IHE

More M&A activity in the pharmaceutical sector had the health care and drug ETFs breaking out to new highs. IHE rallied three percent Tuesday and is now up 41 percent in the last 12 months, nearly double the return of the S&P 500. The consensus on Wall Street is that the trend will continue for the sector even though it has outpaced the overall market.

Market Vectors Gaming ETF BJK

One of the sectors lagging the market has been the gaming and casinos stocks. BJK is trading nearly five percent from its recent high while the S&P 500 is within a few ticks of a new all-time high. The sector has been hit with concerns over both Las Vegas and Macau and their future growth. This morning one of the ETFs top ten holdings reported solid numbers that could help attract money into the ETF.

See also: #PreMarket Primer for February 19: Tesla Earnings After The Bell

MGM Resorts MGM reported a revenue increase of 13 percent in the fourth quarter, mainly driven by strong numbers in China. The key to the future of the gaming sector is China and growth outside the U.S. and therefore the numbers this morning from MGM are even more important to potential investors.

iShares Barclays 20+ Year Treasury Bond ETF TLT

Bonds are up slightly this morning ahead of the FOMC minutes that will be released this afternoon. The yield on the 10-year is lower by 3 basis points to 2.68 percent and TLT and the other bond ETFs are set to open higher.

TLT is finding some support around the $106 area and as long as it holds above that level it could remain in the $106-$110 trading range. Most analysts expected interest rates to surge higher in 2014, however the taper has not had that affect and TLT has held its own. On the flip side, if $106 is breached it would be a sign yields are set to move higher.

KraneShares CSI China Internet ETF KWEB

A 4.7 percent surge yesterday sent the niche emerging market ETF to a new high. The rally over the last two weeks has now exceeded 15 percent as investors shrug off the China concerns and look for high growth companies around the globe. The top holdings are the who’s who in Chinese internet and money was flowing into the sector yesterday.

Some of the top holdings that helped the ETF outperform were Qihoo 360 QIHU, Baidu BIDU, and Ctrip.com CTRP.The key to investing for the long-term in a niche sector is to buy into weakness when others are running for the exits, not to chase the performance of yesterday.