In most cases, the price action in equity-based ETFs is driven
by demand for, or selling pressure on, an ETF's underlying
components. For example, it was not surprising that the Consumer
Staples Select SPDR (NYSE:
) has struggled since last week, as many of its holdings have
Procter & Gamble (NYSE:
) and Philip Morris (NYSE:
), two stocks that combine for almost 23 percent of XLP's weight,
have issued glum quarterly profit guidance. When the stocks that
combine for nearly a quarter of an ETF's weight pare profit
guidance, more often than not, the ETF will suffer.
XLP is just one example. There are plenty of equity-based ETFs
on the market today that are being dragged lower by the slack
performances being notched by some of the funds' most significant
holdings. Investors use 52-week low data to their advantage to
find ETFs that should be avoided or sold short.
For the purposes of this exercise, only equity-based funds
were considered and the funds on this list all had to meet the
following criteria: At least 25 percent of the ETF's weight has
to be trading at or within no more than 10 percent of new 52-week
lows. Here are some of the ETFs that popped up.
iShares MSCI Brazil Index Fund (NYSE:
things have gotten worse, not better, for EWZ
. The ETF has printed another new 52-week low today.
The decline in market value for Petrobras (NYSE:
) has reduced the Brazilian oil giant's weight in EWZ to just
over 14.5 percent (two Petrobras securities combine for that
weight), but that is enough to be problematic as the stock has
hit new lows almost everyday this week. Mining giant Vale (NYSE:
), 13.3 percent of EWZ's weight, is also flirting with a new
For bad measure, Itau Unibanco (NYSE:
), 7.1 percent of EWZ's weight, also hit a new 52-week low today.
Thus, three stocks combining for more than a third of EWZ's
weight are at or near new lows.
Market Vectors Oil Services ETF (NYSE:
) and National Oilwell Varco (NYSE:
), two stocks that combine for nearly 30 percent of OIH's weight,
are not in immediate danger of falling to new 52-week lows. That
is a good thing because Halliburton (NYSE:
), Baker Hughes (NYSE:
), Weatherford (NYSE:
) and Cameron International (NYSE:
) are within 10 percent of their 52-week lows. Those stocks
combine for about 24% of OIH's weight.
), the world's largest provider of offshore drilling services, is
just outside of 10 percent parameter. That stock accounts for 5.4
percent of OIH's weight.
Market Vectors Coal ETF (NYSE:
Perhaps the least surprising member, traders just need to look at
KOL's top holdings
to get a sense for how badly battered this ETF
Peabody Energy (NYSE:
) and Joy Global (NYSE:
) are within 10 percent or less of new lows while Yanzhou Coal
) printed a new 52-week low today. Walter Energy (NYSE:
) is getting close to joining that dubious club as well. Those
stocks combine for about 24 percent of KOL's weight, but the ETF
offers small allocations to some other coal names that are near
new lows as well. thus helping it exceed the 25 percent
China Guggenheim Technology ETF (NYSE:
The China Guggenheim Technology ETF, which has not seen a single
trade today, does not quite meet the criteria of 25 percent of
the fund's weight being within 10 percent of new 52-week lows.
However, Baidu (NASDAQ:
) and Sina (NASDAQ:
) do, and those stocks combine for almost 16 percent of CQQQ's
A few more bad days for some of CQQQ's other U.S-listed names
such as Giant Interactive (NYSE:
) and Renren (NYSE:
) and this ETF could see its number of vulnerable constituents
For more on ETFs that looked poised to decline, click
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