The past month was ugly for exchange traded funds (ETFs) as stocks took a beating amid concerns over the European Union’s debt and the broader global economic recovery. Is a bottom in sight? No one can say for sure, but there are many beaten-down sectors that look very appealing.
According to Ron Rowland over at Money and Markets, there are nine ETFs that look poised for a good upswing when the market finally makes a firm turnaround.
- Market Vectors Solar Energy (NYSEArca: KWT)
- Claymore/MAC Global Solar Energy (NYSEArca: TAN): When oil prices reached a record high of almost $150, alternative energy stocks were on fire. But with the collapse of oil prices and the economic downturn, the cost structure of alternative energy is not as attractive as it used to be. Regardless, oil is a limited resource and it will have to be replaced sooner or later. Rowland also cites a few other alternative energy ETFs that could be appealing:
- First Trust ISE Global Wind Energy (NYSEArca: FAN)
- Market Vectors Nuclear Energy (NYSEArca: NLR)
- Market Vectors Global Alternative Energy (NYSEArca: GEX)
- PowerShares WilderHill Clean Energy (NYSEArca: PBW)
- PowerShares Global Wind Energy (NYSEArca: PWND)
- Market Vectors Steel (NYSEArca: SLX): Steel stocks took a beating during the economic downturn because infrastructure development usually slows down dramatically during a recession. In addition, places like China are now developing their own steel manufacturing bases to meet demand. That means less imports for foreign companies. But as the global economy claws its way out of recession, worldwide demand will increase, along with the fortunes of steel companies. [Steel ETF In for a Pullback?]
- Market Vectors Agribusiness (NYSEArca: MOO): If any business were recession proof, you would think it would be the agriculture business, since we all need to eat. But the agriculture sector can be as volatile as any other since consumer preferences for what we eat, where it comes from and how it is produced is constantly changing. Nevertheless, there is truth to the fact that we all need to eat. [Inflation and Deflation ETF Plays.]
If you’re looking for an opportunity in these or other funds, be sure to have an entry strategy. A simple one we use involves the 200-day moving average as a buy and sell signal. [How to Follow Trends.]
Sumin Kim contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.