The strong rally in stocks so far this year has some analysts looking for ETFs that may be overbought and ripe for a pullback.
For example, some funds are trading significantly above their moving averages, a sign of frothiness.
The ETF Professor at Benzinga reports that certain ETFs are overbought and are also suspect to corrections — specifically, ETFs that are 10% above their simple 50-day-moving averages and an RSI of 70. [India, Energy, Silver ETFs Among Most Overbought]
The following non-leveraged ETFs are the most fragile for the near-term, according to the report:
- Market Vectors Egypt ETF (NYSEArca: EGPT) Up until one week ago, this ETF was a standout performer in 2012. Depending on the political situation and the final outcome of the election, this ETF could be subject to short-selling. [Egypt ETF Climbs Nearly 40% Year-to-Date]
- PowerShares KBW Financial ETF (NYSEArca: KBWX) This lightly traded ETF is up 17% year-to-date and is flirting with its 50 day-moving-average. A glimmer of hope in the financial sector has boosted this fund for the time being. [PowerShares Unleashes Financial Sector ETFs]
- First Trust IPO Index Fund (NYSEArca: FPX) Some argue that the hype of the Facebook IPO could have triggered interest in this ETF. It will be some time before Facebook will show up in this fund’s index, but Visa (NYSE: V) and General Motors (NYSE: GM) may have more to do with the performance. [Facebook and the IPO ETFs]
- UBS E-TRACS ISE Solid State Drive ETN (NYSEArca: SSDD) This note has been the top-performing technology ETP trading yet. Keep in mind, there is no exposure to Apple (NASDAQ: APPL).
- Guggenheim China Real Estate ETF (NYSEArca: TAO) TAO is up about 29% year-to-date as investors wade back into emerging markets. News that China is encouraging economic growth is supporting the run up in this fund.
Tisha Guerrero 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.