If The Price Keeps Dropping, Consider A Non-OPEC Oil-Rich Country ETF

by: Gary Gordon

Renewed fears over Thursday’s deadline for Greece’s debt swap with private bondholders served as the excuse. The truth is ... the price of the S&P 500 had lived more than one standard deviation above a 50-day moving average since the last trading day of 2011. Stocks were nearly certain to pull back.

And it’s not like warning lights weren’t flashing yellow for several weeks. The DJ Transportation Index failed to confirm the Dow Jones Industrials run at 13,000. Small-caps had severely lagged large-caps on a month-over-month basis. And the materials segment had struggled since January. (Note: Investors may want to review my February 8 commentary from one month earlier, “Consider a Temporary Portfolio Hedge With A Volatility ETN.”)

The U.S. stock market is likely to take most of its cues from employment data on Wednesday and Friday (3/9/2012). That said, one might still expect a “pop” or a “drop” on the progress (or lack there of) in Greek sovereign debt dealings.

In brief, assets that were beaten the hardest by the ugly stick in Tuesday’s action (3/7/2012) could bounce the highest on news of a private bondholder agreement. Indeed, it’s hard to imagine that there won’t be a band-aid for the clinging.

Here, then, are some of the ETFs that received the harshest Greek drama-related punishment:

Worst Day of 2012 And Some Of Its Biggest ETF Losers
Approx 1-Day %
Market Vectors Russia (NYSEARCA:RSX) -5.8%
Market Vectors Vietnam (NYSEARCA:VNM) -5.7%
iShares MSCI Spain (NYSEARCA:EWP) -4.9%
iShares MSCI France (NYSEARCA:EWQ) -4.8%
iShares MSCI European Monetary Union (BATS:EZU) -4.7%
iShares MSCI Italy (NYSEARCA:EWI) -4.7%
Click to enlarge

Indeed, member nations of the European Union experienced monster losses in the course of a single day. However, the size of those losses are magnified by the fact that these stock ETFs are unhedged. That is, the euro dollar’s significant decline in the trading day created more dramatic declines than what might be attributable to the selling of foreign equities alone.

Some traders may not care. Keep in mind, many of these same stock ETFs may surge 3%-4% on word of a Greek deal and on short covering.

Personally, I haven’t gone near Europe for years, and I am still unwilling to do so. However, if you beat down non-OPEC oil plays like Market Vectors Russia (RSX) and iShares MSCI Canada (NYSEARCA:EWC) enough, you’re going to get this adviser’s attention.

Disclosure: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.