ETF Watchlist: Week Of October 2, 2017

September has been a traditionally weak month for the stock market. Not this year. Both the Dow and the S&P 500 posted 2% gains during the month, while the Nasdaq tacked on another 1%. Through the first three quarters of 2017, that puts the Dow up by 13.4%, the S&P 500 up by 12.5% and the Nasdaq up by 20.7%. Small-caps and mid-caps have trailed their larger brethren this year, but virtually every asset class and region of the world is up this year. The only exceptions - energy and Russia. The energy sector is still down about 7% on the year, but it’s well off of its lows thanks to a rally in crude that has pushed the price per barrel back over $50. Russia is also rallying and is now down just 3% on the year after being down more than 17% as recently as June.

Barring any unforeseen circumstances, the table is set nicely for the stock market to continue trending positive for the remainder of the year. The only event on the calendar right now that could cause a hiccup would be December’s Fed meeting. The futures market is currently pricing in a 77% chance of a rate hike. The Fed indicated the possibility of multiple rate hikes by the end of 2018, although inflation is back below the Fed’s target level. A move too high, too fast could cause some trouble, but that seems more like a concern for 2018 at this point. Right now, it looks like we’re headed towards our 9th consecutive year of gains. Enjoy the ride while it lasts!

Here’s this week’s list of ETFs that you should focus on in the coming week.

Vanguard FTSE Emerging Markets ETF (VWO)

This ETF is still up more than 24% on the year, but it dropped more than 3% this past month over the period of about half a dozen trading days. Is it the beginning of a market breather following a 20-month run that has seen the fund gain nearly 60%? The fundamentals still look pretty good for emerging markets and I think the bulls are still in charge. Technical analysts are saying that emerging markets may have finally broken out of a 10-year long down trend. Don’t push the panic button on this one, but do keep an eye on it.

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Disclosure: None. 

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