Must Know ETFs For Italy's Election

Markets may be closed until Monday, but there is at least one event scheduled to start of the weekend that could have traders feeling skittish over the next 48 hours. That being Italy's elections. Candidates wrapped up their campaigns in the Eurozone's third-largest economy with most pundits and prognosticators viewing the raise as too close to call. Center-left leader Pier Luigi Bersani held a solid five-point lead over former Prime Minister Silvio Berlusconi two weeks ago, but that gap has narrowed as experts have doubted Bersani's ability to form a coalition government aimed at

. Current Prime Minister Mario Monti, who had to be prodded into seeking another term, is believed to be the preferred candidate of financial markets, but Reuters reports Monti's campaign has lost steam in recent days. At the moment, the most likely outcome appears to be a shared alliance between Bersani and Monti, though even that scenario could lead to the undoing of some of the harsh but necessary austerity measures Monti has implemented. With the result far from evident, traders can still prepare for any outcome with the following ETFs.

Obviously, this list must lead off with the lone Italy-specific ETFs. EWI, which has almost $555 million in assets under management, is in a tough spot, fundamentally and technically speaking. The ETF devotes over 19 percent of its weight Italian oil giant Eni

, but oil prices are coming off a rough week on global growth concerns. As for the technicals, EWI fell out of

and may not find support until $12. That is where the 200-day moving average can be found. Interestingly, 8.73 percent of EWI's shares are sold short, though that number is small when measured against the comparable France and Spain ETFs.

Consider EUO a Berlusconi play, as in the euro will likely falter against the U.S. dollar immediately if Berlusconi runs to a surprise victory. The scenario here is simple. Berlusconi is enjoying something of a political rebirth, gaining ground in the court of public opinion, because of anti-austerity rhetoric. That may be what the average Italian voter wants to here, but it is not what markets want to here. A victory by Berlusconi could be seen as damaging to Italian austerity and to the European Union at large because fears of an Italian bailout could be reignited. Consider this: Credit markets have spoken regarding Italian politics. Berlusconi was still in office in late 2011 when yields on 10-year Italian sovereigns spiked

. That yield closed at 4.45 percent Friday.

An interesting choice to be sure, particularly because the PowerShares S&P International Developed Low Volatility Portfolio features no exposure to Italy. Then again, that is the point behind this selection. Italian elections should be the lone determinant for investors selling ex-U.S. developed world equities. Fortunately, IDLV does not force investors to be monitoring Italian polls this weekend. With a 38 percent allocation to Japan, IDLV is an indirect play on a weaker yen. With Australia, Singapore, Switzerland, Hong Kong, the Netherlands and Germany combining for almost 27 percent of IDLV's weight, investors grab ample exposure to AAA-rated countries. All that comes with a

and no exposure to Italy. For more on ETFs, click

.