Good morning! Here's the ETF Daily Trading Digest for Monday, May 18, 2020.
What To Watch
Economic data continues to look very rough, but traders seem focused on how well the economy is able to reopen. Some early opening states appear to be seeing an uptick in activity, but it remains to be seen what the health toll might be from consumers returning to stores and restaurants.
Stocks were looking at a swift and steep correction last week before managing to recover on Thursday and Friday. That move, in a vacuum, was bullish, but I think that overall sentiment is beginning to trend bearish again. Any developments on the coronavirus front will continue driving the short-term direction of the market.
3 ETF Trade Ideas For The Week Ahead
Consumer Discretionary Select Sector SPDR ETF (XLY)
April retail sales data was abysmal, especially for segments, such as electronics stores, clothing retailers & autos.
Online retail and homebuilder materials, however, held up well indicating certain pockets of strength.
XLY has beaten the S&P 500 by 10% since the start of April, but the outperformance looks overdone right now.
FlexShares Quality Dividend ETF (QDF)
With dividend stocks struggling currently, I've recommended sticking with those backed by healthy balance sheets.
QDF is one of my favorites since it utilizes a proprietary model to identify quality dividends with high yields.
The fund focuses on large-cap well-known names and has a current yield of 3.3%.
iShares Silver Trust ETF (SLV)
Silver prices have rebounded from their bear market low of just under $12 to more than $17 an ounce today.
SLV hasn't kept up, however, since silver is often used as an industrial metal and is tied to the health of the economy.
Silver is still very undervalued here and I expect the price to move north of $20 later this year.
- Regional Banks
Last week finished off with a strong two-day rally. Let's see if equities can follow through on the rally. Treasuries and precious metals are also moving higher setting up a tug of war for short-term market sentiment. I'm still expecting a down leg in equities here.
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