In early 2000, there were a handful of indexes that may have climbed more than 20 percentage points above a long-term trendline. You probably could have counted a number of individual companies that made it to 30% above the 200-day moving average.

Right now? Hundreds of diversified index funds are more than 20% above the ever-popular 200-day MA. In fact, the PowerShares QQQ (QQQQ), the S&P MidCap 400 (MDY), and the iShares Russell 2000 (IWM) are among them.

Do people really wonder why “traders” are calling for a pullback? Even with a market that is neither overvalued nor undervalued, according to the 10-year Shiller P/E, fundamental analysts have to be concerned.

What may be particularly surprising? The 200-day moving average won’t be able to help guide anyone looking for a “direction” on ETFs that are 30% to 40% above the line. One needs to become more familiar with stop-losses.

These 5 well-known ETFs are more than 40 percentage points above a respective 200-day MA:

5 ETFs That Are More Than 40% Above 200-Day MA    
        % Above   YTD Gains
iShares MSCI Brazil (EWZ)   41%   75%
MArketVectors Russia (RSX)   42%   85%
iShares MSCI Sweden (EWD)   43%   50%
Market Vectors Coal (KOL)   59%   94%
iShares MSCI Turkey (TUR)   66%   84%


In most of the above-mentioned instances, the natural resource recovery (China commodity grab) is at work. Russia (RSX), Coal (KOL) and Brazil (EWZ) are heavily dependent on perceived demand for energy, oil and materials.

More important, these are the same investments that lost 65%-80% of their value during the bursting of the commodity bubble. Look at the downfall and the recovery as each relates to the iShares MSCI All-World ACWI Index (ACWI). Note: Both Coal and Russia are still trying to “catch up.”

ACWI Versus Resource-Rich ETFs Over 1 Year

If you’d like to learn more about ETF investing… then tune into ”In the Money With Gary Gordon.” You can listen to the show “LIVE”, via podcast or on your iPod.

Disclosure Statement: ETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.

Leave a Reply