Market Overview

4 ETFs Loaded With Stocks Near 52-Week Lows (EWZ, KOL, CQQQ)

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In most cases, the price action in equity-based ETFs is driven by demand for, or selling pressure on, an ETF's underlying components. For example, it was not surprising that the Consumer Staples Select SPDR (NYSE: XLP) has struggled since last week, as many of its holdings have sold off.

Procter & Gamble (NYSE: PG) and Philip Morris (NYSE: PM), two stocks that combine for almost 23 percent of XLP's weight, have issued glum quarterly profit guidance. When the stocks that combine for nearly a quarter of an ETF's weight pare profit guidance, more often than not, the ETF will suffer.

XLP is just one example. There are plenty of equity-based ETFs on the market today that are being dragged lower by the slack performances being notched by some of the funds' most significant holdings. Investors use 52-week low data to their advantage to find ETFs that should be avoided or sold short.

For the purposes of this exercise, only equity-based funds were considered and the funds on this list all had to meet the following criteria: At least 25 percent of the ETF's weight has to be trading at or within no more than 10 percent of new 52-week lows. Here are some of the ETFs that popped up.

iShares MSCI Brazil Index Fund (NYSE: EWZ) As predicted things have gotten worse, not better, for EWZ below $50. The ETF has printed another new 52-week low today.

The decline in market value for Petrobras (NYSE: PBR) has reduced the Brazilian oil giant's weight in EWZ to just over 14.5 percent (two Petrobras securities combine for that weight), but that is enough to be problematic as the stock has hit new lows almost everyday this week. Mining giant Vale (NYSE: VALE), 13.3 percent of EWZ's weight, is also flirting with a new 52-week low.

For bad measure, Itau Unibanco (NYSE: ITUB), 7.1 percent of EWZ's weight, also hit a new 52-week low today. Thus, three stocks combining for more than a third of EWZ's weight are at or near new lows.

Market Vectors Oil Services ETF (NYSE: OIH) Schlumberger (NYSE: SLB) and National Oilwell Varco (NYSE: NOV), two stocks that combine for nearly 30 percent of OIH's weight, are not in immediate danger of falling to new 52-week lows. That is a good thing because Halliburton (NYSE: HAL), Baker Hughes (NYSE: BHI), Weatherford (NYSE: CFT) and Cameron International (NYSE: CAM) are within 10 percent of their 52-week lows. Those stocks combine for about 24% of OIH's weight.

Transocean (NYSE: RIG), the world's largest provider of offshore drilling services, is just outside of 10 percent parameter. That stock accounts for 5.4 percent of OIH's weight.

Market Vectors Coal ETF (NYSE: KOL) Perhaps the least surprising member, traders just need to look at KOL's top holdings to get a sense for how badly battered this ETF is.

Peabody Energy (NYSE: BTU) and Joy Global (NYSE: JOY) are within 10 percent or less of new lows while Yanzhou Coal (NYSE: YZC) printed a new 52-week low today. Walter Energy (NYSE: WLT) is getting close to joining that dubious club as well. Those stocks combine for about 24 percent of KOL's weight, but the ETF offers small allocations to some other coal names that are near new lows as well. thus helping it exceed the 25 percent criteria.

China Guggenheim Technology ETF (NYSE: CQQQ) The China Guggenheim Technology ETF, which has not seen a single trade today, does not quite meet the criteria of 25 percent of the fund's weight being within 10 percent of new 52-week lows. However, Baidu (NASDAQ: BIDU) and Sina (NASDAQ: SINA) do, and those stocks combine for almost 16 percent of CQQQ's total weight.

A few more bad days for some of CQQQ's other U.S-listed names such as Giant Interactive (NYSE: GA) and Renren (NYSE: RENN) and this ETF could see its number of vulnerable constituents multiply.

For more on ETFs that looked poised to decline, click here.

Posted-In: Long Ideas News Sector ETFs Short Ideas Emerging Market ETFs Technicals Commodities Global Best of Benzinga


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