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Bearish Bets On Emerging Markets Fail To Pay Off

Friday, January 13, 2017 11:41
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Analyst Paul Weisbruch of Street One Financial brings investors his daily fund flows update, which today points out some losing bearish bets on emerging markets, volatility in healthcare, and more outflows in the world’s largest ETF.

Bearish EEM Bets Closed Out

We saw what appears to be closing activity in EEM (iShares MSCI Emerging Markets) near term downside puts, given the run there that has occurred this week. The January 35.50 puts appear to have been closed out, and we note that these options expire next week. Traders betting on a downturn in the EM space will thus leave empty handed.

The iShares MSCI Emerging Markets Indx ETF (NYSE:EEM) was trading at $36.63 per share on Friday afternoon, down $0.08 (-0.22%). Year-to-date, EEM has gained 4.63%, versus a 1.59% rise in the benchmark S&P 500 index during the same period.

EEM currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #2 of 77 ETFs in the Emerging Markets Equities ETFs category.

Healthcare Volatile, Thanks To Trump

XLV (SPDR Healthcare) continues to have a volatile week, finding some support yesterday on its 200 day MA after an intraday reversal earlier this week, when incoming President Trump spoke negatively about pharmaceutical costs. The January 72 calls, which expire next week and assume 1.4% upside in the name over current levels, have been active there in XLV.

The Health Care SPDR ETF (NYSE:XLV) was trading at $71.11 per share on Friday afternoon, up $0.26 (+0.37%). Year-to-date, XLV has gained 3.15%, versus a 1.59% rise in the benchmark S&P 500 index during the same period.

XLV currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 36 ETFs in the Health & Biotech ETFs category.

SPY Outflows Persist

Elsewhere, we continue to see the SPX have trouble with the 2276 level and we have seen substantial outflows this week in SPY (-$4.5 billion out) which may explain some of the resistance that we continue to see at such levels in the marketplace. The inflows side of the market has been rather light this week, and we cannot really point to anything where it appears that anyone is making large long bets via creation activity, but we’ll keep our eyes peeled as we head into a holiday-shortened week next week.

The SPDR S&P 500 ETF Trust (NYSE:SPY) was trading at $227.09 per share on Friday afternoon, up $0.56 (+0.25%). Year-to-date, SPY has gained 1.59%.

SPY currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 108 ETFs in the Large Cap Blend ETFs category.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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