We've previously examined what we deemed
Mendoza line ETFs, or those funds that are
trading below their 200-day moving averages
. The baseball euphemism works because it's used to describe a
batter whose average resides below .200, a condition that
occasionally afflicts even the game's best players.
Hey, until a couple of weeks ago Albert Pujols was below the
Mendoza line. Thing is it's easier for a baseball player to pull
himself out of this ominous territory than it is for a stock or
ETF to get back above its 200-day line. Many technicians believe
a security below its 200-day moving average denotes a bear market
and many fund managers shy away from stocks, ETFs, etc. that rest
below this critical moving average.
Unfortunately, there are no shortage of ETF Mendoza line
candidates these days. Funds tracking global markets are
especially well-represented on our latest sub-Mendoza line list.
The screen used here was for traditional, long ETFs tracking
global markets that are at least 10% below their simple 200-day
Global X FTSE Argentina 20 ETF (NYSE:
No surprise here. Against perhaps the most hostile
political backdrop in South America for Western
, Argentina's current regime is literally cooking the goose that
is ARGT, the lone ETF devoted exclusively to this frontier
Hey, you know you've got problems when some analysts say Peru
(just one example) is more business friendly than your country.
Unfortunately, Argentina's nationalistic tendencies have doomed
ARGT. At more than 24% below its 200-day line, ARGT needs a hot
streak and needs it fast.
Guggenheim BRIC ETF (NYSE:
There are a lot of BRIC and BRICS ETFs on the market today and
EEB obviously falls into the former category, leaving South
Africa out of its country mix. No
South Africa and a low allocation to India
aren't bad things regarding EEB. If anything, those are points in
the fund's favor.
EEB's problem is two-fold: A 25.3% allocation to energy stocks
and a 54.6% weight to Brazil. Those are two of the biggest
reasons why EEB is almost 13% below its Mendoza line.
SPDR S&P International Dividend ETF (NYSE:
Even international dividend funds are offering little shelter
from the global storm these days. In theory DWX, should be
holding up better than it is as 39% of its weight goes to the
ultimate in defensive sectors, telecommunications and
DWX offers exposure to 26 countries, but one could parse
through that lineup and find problems with at least two-thirds of
the group. The lineup includes seven Euro Zone members, the U.K.
and Australia, meaning an alluring yield of 7% might be destined
to grow in the near-term.
First Trust ISE Chindia Index Fund (NYSE:
FNI is home to 50 stocks and the fund aims to evenly split the
group between China and India at 25 for each country, but at the
moment there are more Chinese stocks in the fund and the world's
second-largest economy commands a larger percentage of FNI's
That's the good news because it can be argued Chinese stocks
are currently sporting some compelling valuations. The bad news
is almost every ETF with significant India exposure is being
tarred and feathered in this environment, meaning India is and
will continue to be a serious drag on FNI's performance. FNI is
11% below its 200-day moving average.
WisdomTree Global Natural Resources ETF (NYSE:
Despite the fact that over half of its weight is tied up in
developed markets such as the U.K., the U.S., Canada and
Australia, GNAT has not been able to hide from the fact that it's
an energy and materials play. In the proper market environment,
investors would want to own some of this ETF's top holdings such
as Royal Dutch Shell (NYSE: RDS-A) and Total (NYSE:
That time isn't now and making matters worse for GNAT is on
top of the fact that it's 11% below its 200-day line, the fund
entered death cross territory where the 200-day
line moves below the 50-day moving average
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