NEW YORK (TheStreet) -- The earnings reports of a few key companies will be pivotal for the transportation and retail ETFs this week, while gold ETF investors will be closely following the movement of the euro.
report earnings this week. Analysts expect Best Buy to report 50 cents per share and Kroger to come in at 54 cents per share.
Retail was knocked for a loss on Friday after a disappointing report from May hit the wires. Headlines blared that it was the largest drop in retail sales in eight months, with sales down 1.2% overall. One sector seeing a large drop was hardware stores, down 9.3%, and gasoline sales, down 3.3% thanks to lower pump prices.
Recently, the sector has been driven more by general news than by earnings reports, but Best Buy and Kroger could change that. Best Buy sells things consumers want and Kroger sells things they need, so the two firms capture the two ends of the retail spectrum. Neither firm represents a large percentage of assets in XRT, but they're heavy-weights in their subsectors of the retail category.
iShares Dow Jones U.S. Transportation
, the largest holding in IYT at 10.8% of assets, reports earnings on Wednesday.
The firm has given investors a reason to be optimistic because it hiked its dividend 9% last week. Companies typically will not raise their dividend unless they're confident in future earnings. Analysts predict the firm earned $1.31 per share in the most recent quarter and they've been accurate over the past three quarters. Lower energy prices in May likely helped the firm.
IYT would look much better if it could move above its 50-day moving average, which would require a gain of about 4% into the vicinity of $81 per share. A good report by FedEx could be the catalyst that lifts the sector this week, assuming the broader markets cooperate. IYT will not rally in a vacuum.
SPDR Gold Shares
Gold hit a new high last week and GLD and other gold ETFs made new closing highs. Then a rebound in the euro released some fear from the market and that sent gold prices tumbling away from that new high.
Gold has only spent two periods well below its 50-day moving average since U.S. markets bottomed in March 2009. The first was in April 2009, as investors dumped gold and bought equities, bonds and other assets that were enjoying the start of what would become a very long rally.
From mid-January 2010 to mid-February, gold once again fell below its 50-day moving average. Otherwise, it's been a consistent support level.
As of Friday, the 50-day average is $1,184 an ounce for gold, which translates to about $116 per share for GLD and
iShares Comex Gold
A move to the 50-day moving average, or even slightly below it, would not be surprising if the euro and global stocks can continue to rebound, but if gold does not test its 50-day moving average, it would be very bullish for the metal.
iShares MSCI Spain
The Spain ETF enjoyed a big two-day rally to end last week as the euro had a long overdue rally. Spain is still considered to be in the running for the next epicenter of the global sovereign debt crisis and to call the Spain ETF volatile would be an understatement.
Spain has a large amount of debt maturing at the end of July and it will be raising money in several auctions between now and then. A successful auction on Thursday helped EWP achieve outsized gains relative to the rest of the Europe country ETFs and more gains could be in store if this pattern holds.
iShares MSCI Australia
Australia is not immune from the global mood that has voters in countries such as Japan, Britain, Germany, Holland and the United States dumping their incumbent politicians.
Prime Minister Kevin Rudd's ill-received mining-tax proposal was blasted by mining firms and stock markets, but also in his own party, where there have been some calls for him to be replaced ahead of elections, which may come before November.
Australian mining shares jumped last week when Rudd announced some changes were coming to the proposed law and according to reports from Australia, he has two weeks to do it. If a satisfactory outcome cannot be reached, it appears Rudd's political career may be in jeopardy.
Since the mining tax added insult to injury on the way down for EWA, any softening of the law should help boost shares of EWA, especially if global markets continue to rebound.
-- Written by Don Dion in Williamstown, Mass.
At the time of publication, Dion Money Management was long iShares Comex Gold.
Don Dion is president and founder of
, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.
Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.