Market Overview

4 ETFs That Look Topped Out (SGG, EWW)

Investors and wordsmiths alike can apply the phrase he phrase "Turn out the lights, the party's over" from the Willie Nelson song that Don Meredith used to croon on Monday Night Football broadcaststo scores of stocks and ETFs.

Even in a market where upside has recently been hard to come by, plenty of plain vanilla long ETFs are showing signs of topping out. Some have already started the process. Should the ominous trends of risk off and broader market mediocrity/weakness continue, these funds could endure significant downside.

It should be noted that stocks and ETFs can remain over-extended for long periods of time, but the funds on this list each have reasons for being here and few of those reasons are good.

Market Vectors Egypt ETF (NYSE: EGPT) The Market Vectors Egypt ETF is up almost 4.4 percent in the past month, a performance that is nothing short of impressive when considering how emerging markets ETFs have been treated. Egypt is a politically volatile frontier market with slowing economic growth.

Those are the issues that get plenty of press regarding Egypt. What is not being talked about all that much these days is Egypt's status as major consumer of corn and the fact that the country has to import plenty of the corn it consumes.

There is a gap to be filled in on EGPT's chart and rising corn prices could be the fundamental issue that helps fill that technical gap.

iShares MSCI Mexico Investable Market Index Fund (NYSE: EWW) Speaking of politics, the iShares MSCI Mexico Investable Market Index Fund has benefited from the recent of election of Enrique Pena Nieto as the country's next president. Nieto's promise to do more to lift Latin America's second-largest economy from poverty is perhaps one reason EWW has rallied almost five percent in the past month.

Eradicating Mexico's poverty problem could provide a significant boost to GDP, as Reuters reports. If Nieto is successful in this objective, that bodes well for long-term upside in EWW. For now, EWW looks topped out on a technical basis. After running into resistance at $64, the ETF has fallen back to the low $60s.

EWW has been one of the better houses on the bad block known as Emerging Markets ETFs Boulevard, but patient investors can wait for this fund to fall a bit more to gain better pricing.

iPath DJ-UBS Sugar TR Sub-Index ETN (NYSE: SGG) Sugar has been riding the coattails of corn and soybeans higher in recent weeks, lifting the always volatile SGG along the way.

Maybe sugar's run was warranted, maybe it was not. This is much is clear: SGG may have already topped out. The ETN was trading around $90 on Monday. Today it could find its way to $84. Remember two things about sugar: First, the market is highly manipulated. Second, is there another commodity that is given away free of charge in restaurants?

Utilities Select Sector SPDR (NYSE: XLU) Utilities ETFs are starting to gain even more attention than usual and not for the right reasons. No, there is no getting around the fact that XLU and rival utilities funds have been stellar performers in a market environment that has been favorable to the low beta trade.

Not only is XLU now dealing with some technical resistance, but the valuations for utilities stocks and ETFs are now viewed as rich, indicating the easy money in this sector may have already been made. Perhaps the issue that makes XLU and friend most vulnerable now is that comparable yields can be had in sectors that are not overbought or home to stretched valuations.

Posted-In: Long Ideas News Sector ETFs Short Ideas Dividends Specialty ETFs Emerging Market ETFs Futures Best of Benzinga

 

Related Articles (EWW + EGPT)

Around the Web, We're Loving...

Get Benzinga's Newsletters