ETFs to watch this week

By Don Dion, TheStreet

 

ETF investors will be following the yen and gold closely while keeping an eye on earnings reports in the retail and housing sectors.

 

CurrencyShares Japan Yen Trust (FXY)

After weeks of warnings from the nation's top government officials, Japan at last took action against the yen in hopes of calming its staggering ascension. So far, the intervention has worked, causing the yen and FXY to take a hit. In response, the Japanese equity markets have been given the go-ahead to head higher.

 

Despite Japan's government stepping in to cool the yen, the long-term effect of this action may be menial. Investors typically turn to the yen as a way to protect against market volatility. In the face of the nation's actions, the yen may still gain ground if the investment environment remains choppy.

 

Market Vectors Gold Miners ETF (GDX)

Investors can't seem to get enough of gold. Last week, the yellow metal established all-time highs. This strength has boded well for the gold mining industry; GDX is now trading around new all time highs.

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Following gold higher is silver. Last week, this metal staged a nice jump as wall. The iShares Silver Trust (SLV) is now flirting with all-time highs last seen in early 2008.

 

Whether investors are planning to play ongoing market volatility or a strengthening market, precious metals will be a closely watched slice of the market in coming days.

 

SPDR S&P Retail ETF (XRT)

 This week, investors following the automotive industry will have their eyes glued to their monitors when CarMax (KMX) and Autozone (AZO) release their quarterly earnings reports. Strong numbers from these two firms will bode well for auto-heavy funds such as the Fidelity Select Automotive Fund (FSAVX).

 

With no pure play available, auto-hungry ETF investors have been forced to settle for broader instruments which dedicate a slice of their portfolio to this section of the market.

 

The auto industry is promising and XRT dedicates 12% of its portfolio to the industry. However, the car companies underlying the fund are not the only thing going for it. This ETF has been a source of strength in recent months as consumers continue to turn to the malls and online retailers to get their shopping done. This trend should continue as consumers gear up for the holiday season.

 

iShares Dow Jones U.S. Home Construction Index (ITB)

The real estate industry remains a tricky part of the market to navigate. Last week, the home builders got knocked around after RealtyTrac released its foreclosures numbers which saw an uptick in August from July.

 

Looking to this week, investors should get prepared for another round of data which will include housing starts, existing home sales, and new home sales. Additionally, industry leader, KB Homes (KBH) is scheduled to release its quarterly earnings report.

 

The outcome may be positive but, given the uncertain climate surrounding real estate, ITB and SPDR S&P Homebuilders ETF (XHB) should be avoided by risk adverse investors. Investors with the stomach for risk should keep exposure small and maintain a close watch.

 

First Trust NYSE Internet Index Fund (FDN)

Strong earnings from Oracle (ORCL) and Research in Motion (RIMM) further strengthens my theory that tech is one of the most important stories to watch today.

 

Specifically, the companies responsible for the Internet and personal gadgets are gaining traction as investors and consumers increasingly turn to their smartphones, e-readers, and laptops for near instant information anywhere in the world.

 

FDN tracks a basket of firms headlining this trend, including top positions such as Google (GOOG), Amazon.com (AMZN) and Salesforce.com (CRM).

 

So far, September has been a strong month for the fund, helping it lock in new 2010 highs. Looking to this week, I don't see much standing in the way of this fund's ascension. In fact, with the holiday season fast approaching, I think this fund will hold promise as consumers turn to the Internet to get their shopping done.

 

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