A market rally through the often lethargic summer months and
into the early part of September, traditionally the worst month of
the year for equities, may have caught a lot of investors off
guard. There is some good news, though and it comes in the form of
the technical analysis phenomenon known as the golden cross.
The easy definition of a golden crosss is that it occurs when a
shorter term moving average crosses above a longer term moving
average. Since many technical analysts place more emphasis on
longer term moving averages, the golden cross is viewed as
significant in terms of upside potential. Plus, the longer term
moving average can also turn into a new support area following the
Not indicator is 100 percent foolproof, but there are a decent
amount of ETFs that recently experienced golden crosses or are
getting close. For the purposes of this list, only 50- and 200-day
simple moving averages were used.
Industrial Select Sector SPDR (NYSE:
The Industrial Select Sector SPDR joined the golden cross club
in late August
, a bullish sign considering this ETF's high-beta constituents and
the sluggish U.S. economy. XLI, which has $3.3 billion in assets
under management, has risen 0.76 percent in the past month, but
despite the decent technicals, this ETF could be undone by an
unfavorable macroeconomic picture.
Economically sensitive names such as United Parcel Service
), Union Pacific (NYSE:
), Caterpillar (NYSE:
) and Boeing (NYSE:
) combine for about 19 percent of the fund's weight. That implies
XLI can only rally on technicals for so long before the tepid
broader economy comes home to roost with this ETF.
Energy Select Sector SPDR (NYSE:
Another SPDR fund chock full of high-beta names makes the list
in the form of the Energy Select Sector SPDR (NYSE: XLE. The
largest energy ETF by assets
experienced the golden cross just a few days
and the ETF has jumped 1.7 percent in the past month.
XLE's chart is stronger than XLI's as the former has broken
through resistance at $72 and looks poised to run to its 52-week
high just below $76. Dow components Exxon Mobil (NYSE:
) and Chevron (NYSE:
) combine for over 34 percent of this ETF's weight.
iShares MSCI Poland Investable Market Index Fund (NYSE:
The iShares MSCI Poland Investable Market Index Fund is another
new addition to the golden cross club and the
crossover has certainly led to some bullish
. EPOL has gained over six percent in the past week.
Since it is not a Eurozone member, Poland has been viewed as one
steadier economic hands in Europe
. However, this is still an emerging market and that means
investors want more in terms of economic so that they are
adequately compensated for taking on developing nation risk.
Poland did not deliver on that in the second quarter posted GDP
growth 2.4 percent. That was well below the 2.9 percent economists
expected and well below the 3.5 percent growth seen in the first
Poland's second-quarter GDP report underscores the good news/bad
news scenario when it comes to investing in the country. The good
news is Poland's economy
is not export-dependent
. The bad news being it was slack domestic demand that weighed on
the economy in the previous quarter.
For more golden cross ETFs, click
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