Tread Carefully With Egypt ETF

No surprise here. The Market Vectors Egypt ETF

is enjoying a solid start to the week, surging 4% in the first full trading day of the post-Mubarak era. One more nice push like this and EGPT will be close to reclaiming its pre-protests peak in the $20.50 area. That's the good news, but there are reasons for concern here. Taking a much longer-term view of EGPT, it should prove to be beneficial that investors are now aware of the ETF. Prior to the revolution in Egypt, we felt like we were the only ones that ever discussed EGPT and the bullish thesis behind the ETF. EGPT was plagued by slack volume and weak assets under management. The volume situation has certainly changed and AUM could follow down the road and while the longer-term story here has gotten even more compelling, there are still risks. Speaking strictly from a trader's perspective, after its big move down, EGPT has now moved $4 higher in about two weeks. That can be looked as too far too fast. Beyond that, there are still major geopolitical factors to consider with EGPT. Yes, Mubarak is gone, but what type of government Egypt adopts next will be crucial to EGPT's fortunes. Simply put, the country is in the nascent stages of a revolution and revolutions rarely go smoothly. Doing away with Mubarak was a symbolic hurdle, now the real work begins. Will Egypt become Iran post-Shah or Afghanistan post-Russian invasion? If the answer proves to be "yes" there will be no reason to be involved with EGPT. Egypt's next government must realize what caused the revolution: An inspired, young population that wants jobs. At the same time, that same demographic must realize anti-U.S., anti-Israel actions and rhetoric are not productive and will merely lump Egypt in the same group as Iran, Syria and other unsavory regional players. Long story short: Only fools rush in. Treat EGPT as a trade, not an investment until it proves otherwise.