3 ETFs to Trade Short Term

As long as you're nimble with your trades, these three ETFs offer upside opportunity.

   

The bulls have the ball and are running hard! At times like these it’s easy to be a raging bull but that’s just the time when you have to take the most care. It’s an odd peculiarity of the stock market that the more comfortable you are with your position the more often you will be proven to be wrong.

The key is to make sure you are viewing this current move as a trader’s market. I wouldn’t be putting long-term buy-and-hold money to work up at these levels because the chances are you’ll be able to buy the market 10% cheaper by May.

If you’re going to go long here then you want to be using your short-term trading money to make plays. Focus on groups that have either been very strong or lagging groups that are showing signs of catching up.

This week, I’ve got two sectors for you to look at that are playing catch-up and another that has been red hot but still looks like it wants to go higher.  Let’s get started with the hot one first …

iShares MSCI Mexico Investable Market Index Fund (EWW)

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The iShares MSCI Mexico Investable Market Index Fund (NYSEARCA:EWW) gives you exposure to the blisteringly hot Mexican markets.

The ETF is up almost 50% from the June low but still looks like it may have more in it. You can use a pullback to $72.50 to get long with a $68 stop and an $80 price target.

iShares Trust Dow Jones US Utilities Sector Index Fund (IDU)

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The electric utilities sector has just swung back into favor after spending the last several weeks under-performing the market.

The iShares Trust Dow Jones US Utilities Sector Index Fund (NYSEARCA:IDU) is made up of a collection of the countries largest utility and energy companies, including Duke Energy (NYSE:DUK), the Southern Co. (NYSE:SO), Dominion Resources (NYSE:D), NextEra Energy (NYSE:NEE), Excelon (NYSE:EXC), American Electric Power (NYSE:AEP), Spectral Energy (NYSE:SE), FirstEnergy (NYSE:FE), Pacific Gas and Electric (NYSE:PCG), and PP&L (NYSE:PPL).

The ETF yields about 3.47% and is actionable here with an $84 stop loss and a target of $95.

Market Vector Semiconductors ETF (SMH)

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The semis have been sub-par performers for the last year but are finally starting to wake up. This ETF will give you exposure to the biggest names in the chip business, including Intel (NASDAQ:INTC), Texas Instruments (NASDAQ:TXN), ASML Holding (NASDAQ:ASML), Broadcom (NASDAQ:BRCM), Applied Materials (NASDAQ:AMAT), Analog Devices (NASDAQ:ADI), Altera Corp. (NASDAQ:ALTR) and Xilinx (NASDAQ:XLNX).

The ETF is actionable here, but just note: You have immediate resistance at $36. If this one can close above $37 then you should see a run to $40. Be sure to use a stop loss of $29.

Yes, the market is running and yes we will probably go a little higher but this market doesn’t have the legs to make a sustained run higher from here. The next up move will be more of an all-out sprint rather than a sustained, ongoing climb. That’s not to say you can’t make money here because you can, especially  in these ETFs, but pay attention to the entry prices and stop-loss points for optimal returns.

 


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