4 ETF Signs The Bulls Won't Like

Stocks and other riskier assets have are now into a second day of selling off, prompting debate as to whether this is merely a healthy correction before the resumption of the previous rally or the start of a prolonged slump. Some market participants might be inclined to say that two days of market action does not provide enough information to decisively say the recently established uptrend is now threatened. Others argue that there ample causes for concern, such as slack economic data and the sequestration debate. Time will tell which school of thought will be vindicated, but in the meantime, some ETFs could be spinning tales that are not likely to please the bulls. Consider the following scenarios.

Investors are once again embracing utilities stocks and ETFs as the broader market falters. That much is understandable as the Utilities Select Sector SPDR

has a one-year correlation of just 0.11 to the SPDR S&P 500

,

. Indeed, XLU and related fare have been less bad compared to higher beta sectors over the past two days, but further momentum toward utilities equities and ETFs could easily be viewed as a sign risk appetite is diminishing. There is a cautionary tale investors must acknowledge. In June 2012, Benzinga

and trading with a P/E ratio that was high on a historical basis. That article ran on June 18 when XLU's P/E ratio was 15.4. The ETF is barely cheaper today with a P/E ratio of 15.04, implying investors will be paying up for a sector that offers little in the way of growth.

Often used as a barometer for gauging investors' willingness to embrace risk, junk bond ETFs have been seeing outflows. While this scenario

and immediately followed by inflows and higher share prices, it is worth noting high-yield bond ETFs have recently seen outflows. On Tuesday, $137 million was pulled from high-yield bond funds, almost two-thirds of which was attributable to ETFs,

. Assuming net outflows are the case again this week, that will mark the fourth consecutive week of cash being pulled from junk bond funds, the web site reported.

After making several attempts to make through resistance in the $97 per barrel area, West Texas Intermediate futures are now spotted below $92.80 per barrel. Oil is one of the ultimate risk assets and further retrenchment here could easily drag equities lower. If the lower highs on the WTI chart are not convincing enough, try the fact that the PowerShares DB Crude Oil Double Short ETF

is up 10 percent in the past five sessions. Today, DTO is higher by 3.7 percent on volume that is better than 50% above the daily average.

As was noted on Wednesday,

. India and Russia have not been anything to write home about, either. Combine those six countries and there is roughly 68 percent of the country weight in the iShares MSCI Emerging Markets Index Fund

. EEM is suffering, but that has been good news for the Direxion Daily Emerging Markets 3X Bear Shares

. In a sign of the times, EDZ is up 4.3 percent today on volume that is more than 57 percent above the daily average. For more on ETFs, click

.