“I also noticed that volume has been just destroyed in this space. Looking at the On Balance Volume indicator, which adds shares on up days and subtracts shares on down days to give an idea of buying and selling volume, it’s been knocked down to levels not since early 2013. This tells us that heavy volume has been coming into $FDN on periods of weakness. This is typically a bearish sign but it can also be viewed through a contrarian lens. Has the selling been overdone for this internet ETF?,” he said.
Although FDN and PNQI have allocations to Facebook (NasdaqGS: FB) of 6.8% and 8.3%, respectively, neither ETF is excessively weighted to social media names ex-Facebook. That is a good thing following a month in which the Global X Social Media Index ETF (NasdaqGM: SOCL) lost 14.3%.
FDN only allocates 1.56% to Twitter (NYSE: TWTR) and PNQI has no exposure to that stock. That could also be a good thing after Twitter plunged 17% last month. However, with an average weight of 7.5% to Amazon (NasdaqGS: AMZN), both ETFs will need the e-commerce to climb out of its bear market if the funds hope to move higher over the coming months. [Amazon Hurting These ETFs]
PowerShares NASDAQ Internet Portfolio
Tom Lydon’s clients own shares of Amazon and Facebook.