Icahn Proposes Ebay Paypal Split; Outlook For Mining ETFs

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[Chart courtesy of MarketWatch.com]

1. Moving The Markets

The Nasdaq hit a new 13-year high today, while the S&P posted modest gains and the Dow fell about 0.3%. IBM’s (IBM) 3% drop was a heavy blow to the Dow. Today was a great day for eBay (EBAY), Netflix (NFLX) and F5 Networks (FFIV) after releasing their quarterly earnings for Q4 2013. Overall, it seems investors are still playing the equity markets in a conservative manner as they await Q4 earnings to come in for a majority of companies.

Shares of eBay jumped as high as 12% in post-close trading today after influential shareholder Carl Icahn made a statement that he is considering splitting the eBay (EBAY) and PayPal corporate structure. Ebay is by no means in financial trouble. In fact, just today they reported that revenue and earnings grew in Q4 of 2013 and a significant stimulant for the growth was its payment business, PayPal. However, Icahn was not shy to say that the company has not performed at its full potential due to the fact that ebay and PayPal operate under the same roof.

In ETF news, PureFunds made a decision to shut down two mining ETFs: PureFunds ISE Diamond/Gemstone ETF (GEMS) and PureFunds ISE Mining Service ETF (MSXX). As we all know, 2013 was tough for mining ETFs and things are not looking great thus far in 2014 given the fact that Europe is on the rebound, the dollar is stronger and the Fed is moving forward with their proposed tapering. While mined commodity ETFs will likely suffer in the near future, it may surprise you to know that the Market Vectors Gold Miners ETF (GDX) has still managed to gather a huge asset base of $4.3 billion. GDX has returned about 10% so far in 2014, but keep in mind that it was a disastrous pick in 2013.

Our 10 ETFs in the Spotlight followed the sideways theme of the week and changed only slightly.

2. ETFs in the Spotlight

In case you missed the announcement and description of this section, you can read it here again.

It features 10 broadly diversified ETFs from my HighVolume list as posted every Monday. Furthermore, they are screened for the lowest MaxDD% number meaning they have been showing better resistance to temporary sell offs than all others over the past year.

In other words, none of them ever triggered their 7.5% sell stop level during this time period, which included a variety of severe market pullbacks but no move into outright bear market territory.

Here are the 10 candidates:


All of them are in “buy” mode meaning their prices are above their respective long term trend lines by the percentage indicated (%M/A).

Now let’s look at the MaxDD% column and review the ETF with the lowest drawdown as an example. As you can see, that would be XLY with the lowest MaxDD% number of -5.73%, which occurred on 11/15/2012.

The sell off in the month of June 2013 did not affect XLY at all as its “worst” MaxDD% of -5.73% still stands since the November 2012 sell off.

A quick glance at the last column showing the date of occurrences confirms that five of these ETFs had their worst drawdown in November 2012, while the other five were affected by the June 2013 swoon, however, none of them dipped below their -7.5% sell stop.

Year to date, here’s how the above candidates have fared so far:


3. Domestic Trend Tracking Indexes (TTIs)

Our Trend Tracking Indexes (TTIs) showed a mixed reaction today as the Domestic TTI dipped a tad, while the International TTI inched higher:

Domestic TTI: +4.16% (last close +4.19%)

International TTI: +7.19% (last close +7.05%)

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