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Shattered January/February ETF Romances (RSX, PSCE, PALL)

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Shattered January/February ETF Romances (RSX, PSCE, PALL)

For beleaguered traders and investors, it probably feels like ages ago that markets were sanguine and most risky assets were moving higher on almost daily basis. In reality, that scenario was playing out just a few short months ago.

A credible January effect helped lead U.S. equities and plenty of global markets higher earlier this year but March weakness turned to April showers and now markets are showing that "sell in May and go away" is for real this year.

Now plenty of ETFs that turned in stellar performances in January and February are now in the red on the year. Let's use this look back to turn up rebound candidates and some ETFs whose best days in 2012 may have already come and gone.

Market Vectors Russia ETF (NYSE: RSX) We'll stick with largest Russia ETF for the purposes of this piece, but the iShares MSCI Russia Capped Index Fund (NYSE: ERUS) and the SPDR S&P Russia ETF (NYSE: RBL) could be inserted here as well. From the start of the year through the end of February, RSX jumped an impressive 24%. With Monday's loss of almost 4%, RSX has given all of those gains back and now finds itself down almost 3% on the year.

RSX is a credible rebound play, but if and only if oil prices snap back and investors decide to favor the BRICS group once again.

Market Vectors Steel ETF (NYSE: SLX) The Market Vectors Steel ETF started 2012 on a hot streak, surging 15% in the first two months of the year as investors favored high beta, risk on materials stocks. Nearly as quickly as they warmed to SLX, investors throw this fund out with the materials bathwater and the ETF is now down 2% year-to-date. Looking at the chart, it seems more likely that SLX retests its 52-week below $38.60 than it does its February high around $58.

ETFS Physical Palladium Shares (NYSE: PALL) If you thought that ETFs such as the SPDR Gold Shares (NYSE: GLD) have it rough lately, you'd be correct, but gold has actually looked decent when measured against palladium. PALL was able to cruise from the low $60s to the $70s by the end of February and retested around $71-$72 in early March before falling to pieces. The lone ETF backed by physical palladium has lost 9% in the last week alone and is now down 10% on the year.

PALL could snap back, that's just the nature of the commodities beast, but it will take global investors feeling more comfortable about the state of the U.S. and Chinese economies and auto sales and production in those countries.

PowerShares S&P SmallCap Energy ETF (Nasdaq: PSCE) The PowerShares S&P SmallCap Energy ETF started the year extending a rally that started back in October that saw the unheralded ETF jump almost 50% by the time February drew to a close. In other words, PSCE benefited from the risk on trade and rising oil prices just as its more popular energy ETF rivals did.

That's good on the way up, but when momentum in the energy sector reversed course in March, PSCE followed suit. That month, the ETF failed to take its February high. A month later, PSCE failed to reclaim the March high and thus far in May, the ETF hasn't come within spitting distance of the April high. All of that is to say PSCE is making lower highs, a bearish sign.

PSCE is now down 5% year-to-date. It could be a rebound candidate, but only if all three following come to pass: Oil rebounds, small-caps come back into favor and energy sector M&A activity heats up.

For more on seasonal investing with ETFs, please click HERE.

Posted-In: Long Ideas News Sector ETFs Short Ideas Specialty ETFs Small Cap Analysis Emerging Market ETFs Futures

 

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