Following a grizzly May for equities, the SPDR S&P 500
) has rebounded in June with a gain of almost 1%. That gain may
not be enough for some traders to say the market is in rally
mode, but it has been enough to trim the number of ETFs and ETNs
that can be labeled "oversold" on a technical basis.
Data pulled from Finviz indicates that at the moment, there
are less than 55 ETFs and ETNs that sport the combination of
residing below their 50-day moving averages and a 14-period RSI
of 30 or lower as of Wednesday's close. Some members of the
following list have the look of rebound plays from the long side
while others could easily have more downside ahead. All are
worthy of consideration as trades in the coming months.
PowerShares DB Energy Fund (NYSE:
Down almost 22% from its 52-week high, the PowerShares DB Energy
Fund deserves a spot on an ominous ETF list, that being one
ETFs in bear market territory
DBE's trials and tribulations are easy to explain. The fund is
a combination energy play that offers exposure to an index that
tracks Brent crude, heating oil, West Texas Intermediate crude,
natural gas and RBOB Gasoline. Look at the charts for the U.S.
Gasoline Fund (NYSE:
) and the U.S. Oil Fund (NYSE:
), among others, for an explanation as to why DBE has been
DBE is at a pivotal technical juncture right now. The fund
needs to hold the $24.25 area. If not, it could return to prices
not seen in two years.
PowerShares KBW Capital Markets Portfolio (
ETFs focusing on investment banks, exchange operators and other
capital markets firms have not been big hits with investors. The
iShares Dow Jones US Broker-Dealers Index Fund (NYSE:
) and the PowerShares KBW Capital Markets Portfolio prove as much
as neither is home to robust assets under management or decent
average daily volume.
State Street (NYSE:
), Franklin Resources (NYSE:
), Goldman Sachs (NYSE:
), CME Group (NYSE:
) and Morgan Stanley (NYSE:
) combine for about 38% of KBWC's and the declines those stocks
have endured recently explain KBWC's oversold condition.
The ETF's biggest problem is not whether or not bank stocks
will bounce back, it is what traders will flock to KBWC to
express a bullish view on the banking stock. KBWC does not have a
liquidity problem because its underlying components heavily
traded in most instances. The ETF does have a volume problem
though. That is to say KBWC has not traded in over a week.
EGShares Technology GEMS ETF (NYSE:
In a market environment that is more hospitable to emerging
markets equities, the EGShares Technology GEMS ETF would classify
as an under-the-radar ETF worthy of consideration as a high-beta
For now, technology issues are moving in fits and starts and
emerging markets are getting battered by Europe's sovereign debt
crisis. Those are not QGEM's biggest problems. Nor is the fact
that like KBWC, QGEM has not traded in over a week.
biggest problem is India, a country that accounts
for almost 40% of the fund's weight
. Amid slowing growth and speculation that India could lose its
investment grade credit rating, ETFs with large weights to the
country have been repudiated. QGEM has been no exception.
iShares MSCI Emerging Markets Consumer Discretionary
Sector Index Fund (Nasdaq: EMDI)
When the iShares MSCI Emerging Markets Consumer Discretionary
Sector Index Fund debuted in February, it
walked right into a competition with the EGShares
Emerging Markets Consumer ETF (NYSE:
), the oldest and largest ETF devoted exclusively to the emerging
markets consumer theme.
EMDI is another example of an oversold ETF that does not trade
everyday, but most of the fund's largest components have decent
liquidity. The oversold condition can quickly correct if
investors come running back to emerging markets ETFs, but along
those lines, it should be noted ECON is not oversold, trades far
more frequently and has outperformed EMDI year-to-date.
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