Market Overview

Checking in on the BUNS

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Investing acronyms are all the rage these days. BRIC has been around a while and has since become BRICS to include South Africa. CIVETS has risen to acclaim in recent years. MIST recently joined the scene but has been trumped by CAPPT.

Those acronyms are devoted to emerging markets, but there are some developed market acronyms on the scene worth acknowledging as well. Acknowledgment does not necessarily mean an invitation to be long, however, and that has been the case with the BUNS nations.

BUNS joined the ranks of catchy developed market acronyms highlighting Europe ETFs that, at the time, needed to be shorted or avoided.

Global equities surged on Friday after European policymakers signaled they would loosen loan requirements for Spain and indicated help could be on the way for Italy too, if needed. Even with Friday's rally, equities from the BUNS nations – Belgium, the U.K., the Netherlands and Spain – have plummeted since BUNS was coined since late April.

Here is a review of the BUNS ETFs in an effort to see if any of these funds hold any upside promise in the near-term.

iShares MSCI Belgium Investable Market Index Fund (NYSE: EWK) A jump of nearly six percent on Friday has helped EWK overt some near-term technical danger. That is some good news, but there is more.

Earlier this month, Belgium's Federal Plan Bureau forecast 2012 and 2013 GDP growth rates of 0.5 percent and 1.3 percent, respectively. Those estimates imply that growth in the Eurozone's sixth-largest economy should outpace the Eurozone average.

EWK, which has lost 2.3 percent since BUNS was coined, looks to be on marginally firm footing today, compared to late April. That said, no European economy is out of the woods yet and EWK's 22 percent allocation to bank stocks is a red flag in this environment.

iShares MSCI United Kingdom Index Fund (NYSE: EWU) The U.K. is not a Eurozone member, but that status has not prevented the country from sliding into a recession. That has been a negative catalyst behind EWU's 5.6 percent slide in the past two months. EWU's other black mark is sector composition--the fund devotes a combined 30 percent of its weight to energy and materials stocks.

It is not as if the likes of BP (NYSE: BP), Royal Dutch Shell (NYSE: RDS-A) and Rio Tinto (NYSE: RIO) are bad stocks. The problem is that those stocks (and other comparable fare) do not sit well with investors in a market that, until Friday, had been decidedly risk off in recent weeks.

iShares MSCI Netherlands Investable Market Index Fund (NYSE: EWN) On Friday, the iShares MSCI Netherlands Investable Market Index Fund surged 5.3 percent on heavy volume. The Dutch economy inched its way out of a recession in the first quarter and the country can still lay claim to AAA credit rating.

The downside is that Dutch banking giant ING says the Dutch economy could be in for a triple dip. ING expects Dutch GDP to have contracted in the second quarter and to do the same in the third quarter.

iShares MSCI Spain Index Fund (NYSE: EWP) On volume that was better than double the daily average, EWP soared 7.3 percent on Friday, leading the BUNS quartet higher. Spaniards do have reason to celebrate this weekend. Policymakers have thrown the Eurozone's fourth-largest economy a lifeline and Spain squares off against Italy for the 2012 UEFA EURO championship on Sunday.

There are still significant downside risks to this ETF, which is 40 percent-allocated to financials. Over the past two years, Europe-induced market rallies have shown a tendency to rapidly fade. Beyond that, less stringent loan requirements do not solve all of Spain's economic woes. The country is still home to the Eurozone's highest unemployment rate and the country's budget deficit as a percentage of GDP increased in the first quarter.

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