There might be some hope for exchange traded funds (ETFs) that have been kicked around by market volatility the last few weeks. The sectors and stocks that pulled back first and fell the hardest are also the ETFs that have been sold the most either from long or short sales, says John Hughes and Scott Maragioglio for TheStreet.com. This is good news because those that got beat up the worst tend to recover the best.

Take REITs for example, such as the iShares Dow Jones U.S. Real Estate (IYR). First, real estate concerns brought IYR down, then it was pummeled by credit concerns. For now, this ETF is seems to have stabilized. It’s up 7% from the market’s recent low on August 15. IYR’s rally is a good short-term price action that suggests selling has abated for now. Before investing in any rebound ETFs, investors must make sure they fit with their portfolio needs.

Iyr_etf_chart

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.