ETF Outlook for Wednesday July 30, 2014

ETF Outlook for Wednesday, July 30, 2014

The pullback in the U.S. stock market continued yesterday with all three major indices closing in the red. The NASDAQ held up the best with a small loss of 2 percent, led by some strong technology earnings. The tech-heavy index should once again show relative strength after Twitter TWTR reported earnings last night that beat estimates. The stock is up over 20 percent in pre-market trading.

Big economic numbers are set to move the market today, particularly second quarter GDP and the ADP July jobs report. GDP came in much stronger than expected, but the jobs report, while good, was disappointing. There is also the end of the FOMC meeting and that will undoubtedly have an affect on stock prices. Buckle in for a wild day.

SPDR Dow Jones Industrial Average ETF DIA

The index ETF is now off 1.3 percent from its all-time high it set two weeks ago. Yesterday’s midday reversal on the chart is bearish in the short-term chart, but with the market set to open higher today it could erase the negative tone. As far as support is concerned, DIA is close to an important level that needs to be monitored. The 50-day moving average ($168.39) is only 0.25 percent below where the ETF closed on Monday. In the past the indicator has been an area where the ETF has bounced and buyers came into the market. Another bounce off the level could indicate an ETF that is ready to once again rally to a new all-time high.

Global X Social Media ETF SOCL

It will be a big day for SOCL with TWTR trading higher by over 20 percent before the opening bell even rings. Even though TWTR only makes up 4 percent of the allocation and is the 12^th largest holding, the news will put a bid under all related stocks in the niche sector. Two of the top holdings, Facebook FB and LinkedIn LNKD are also trading higher in the pre-market. A close above $19.91 would be a significant breakout for the ETF and could start a new leg higher that could test the 52-week high in the $23 area.