Can Timber ETF Sustain Waning Risk Appetite?
If you're a believer in the bullish housing data that has been seen recently in the U.S., there's an ETF to play this trend with. The Claymore/Beacon Global Timber ETF (NYSE: CUT) offers exposure to residential real estate plays such as Fibria Celulose S.A. (NYSE: FBR), Rayonier Inc. (NYSE: RYN) and Class A Common Stock (NYSE: GEF).
At its core, CUT is indicative of its title, meaning it is a play on lumber demand, putting the ETF firmly at the mercy of risk appetite. In other words, regardless of how robust of housing data appears to be in the States, CUT will likely be held hostage to trends in emerging markets equities and commodities prices rather than U.S. housing data.
A long-term investor can probably wait for better prices here and it is worth noting that CUT is trading below its 50-day moving average, so the technicals aren't exactly appealing.
The bottom line is that it is hard to advocate a bullish posture in CUT at this time. If the 200-day moving average at $17.66 is violated, CUT could see several more dollars to the downside.
