Market Overview

This Week's ETFs To Watch: A Lot Of Familiar Faces

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Last week was a forgettable one for U.S. stocks as the S&P 500 sank 1.5 percent for the week. The Dow Jones Industrial Average is on a seven-day losing skid, its worst such streak in four years, while the Nasdaq Composite lost about 1.8 percent for the week.

In the world of exchange traded funds, nearly 60 ETFs hit 52-week lows on Friday and more than half of those funds actually hit all-time lows. That compares with just two ETFs hitting all-time highs and merely three entering the 52-week high club.

With an eye toward the week ahead, identifying ETFs that traders should closely monitor is not difficult, but this group does include plenty of funds that finished last week looking vulnerable to additional downside.

Starting with some industry ETFs that could be the objects of bearish desires, there is biotech. The iShares Nasdaq Biotechnology ETF (NASDAQ: IBB), the largest biotech ETF by assets, lost almost four percent last week and since the end of July, investors have pulled nearly $200 million from the fund. Still, that is a scant percentage of IBB's $9.4 billion in assets under management.

Other biotech ETFs were much worse last week. For example, the equal-weight SPDR S&P Biotech ETF (NYSE: XBI) tumbled nearly 8.2 percent. As we reported last Friday, weakness in biotech ETFs, in particular XBI, is good for the Direxion Daily S&P Biotech Bear 3X Shares (NYSE: LABD). LABD is the triple-leveraged, inverse answer to XBI. 

Calling this a “make or break” weak for biotech stocks and ETFs could be overstating the matter and there is a cautionary tale with getting too bearish too fast on ETFs like IBB and XBI. That being that nearly every biotech dip over the past several years has been an opportunity to buy not to become more bearish.

Things were going great for media stocks and the PowerShares Dynamic Media Portfolio (NYSE: PBS) until Dow component Walt Disney (NYSE: DIS) delivered earnings that disappointed investors. Disney's almost nine percent decline permeated the media space, sending PBS lower by five percent. 

Here is how fragile media stocks have suddenly become: “In just five stocks -- Disney, Time Warner Inc., Fox, CBS and Comcast Corp. -- almost $50 billion of value has been erased in two days,” according to Bloomberg.

PBS allocates a combined 15.3 percent of its weight to Disney, Time Warner (NYSE: TWX) and CBS (NYSE: CBS).

Among emerging markets ETFs, investors can take their pick of troubled funds. Eighteen such funds hit 52-week lows last Friday, which is to say finding a troubled emerging markets ETF these days is not difficult.

However, the nominee for an ETF to closely monitor in the week ahead is the $556.8 million iShares Latin America 40 ETF (NYSE: ILF). Along with five other Latin America ETFs, ILF hit a 52-week low last Friday. Three of the other five Latin America offenders were Brazil funds and that country accounts for almost 47 percent of ILF's weight. ILF has plunged 17.8 percent this year and resides at its lowest levels since the first quarter of 2009.

Posted-In: Biotech Long Ideas Sector ETFs Short Ideas Emerging Markets Specialty ETFs Emerging Market ETFs Pre-Market Outlook

 

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