3 Emerging Markets ETFs for Short-Term Traders
With a number of country fund ETFs rallying above their long-term, 200-day moving averages, a whole population of swing traders and active investors who only buy stocks and ETFs in bull markets will now turn their attention to buying the dips in country funds.
Among those international ETFs pulling back on Friday, some of the most oversold include emerging markets funds like the iShares MSCI Brazil Index Fund ETF (NYSE: EWZ). Shares of EWZ crossed into bull market territory in the second half of January as part of a rally during which the ETF closed higher for seven days in a row, gaining more than 6% and becoming very overbought in the short-term. After closing lower for two out of the next three sessions and finishing in technically oversold territory above the 200-day for the first time since May 2011, shares of EWZ closed higher for six out of the next seven trading days en route to a new, intermediate-term high.
EWZ has a “consider buying” rating of 9 out of 10 after earning a major four-point ratings upgrade midway through trading on Friday. The fund has a positive edge of more than half a percent in the short-term.
With a short-term, positive edge that is more than twice that of EWZ, the iShares MSCI South Africa Index Fund ETF (NYSE: EZA) earned a sizable six-point ratings upgrade during Friday’s session. The stock, which opened Friday morning with “consider avoiding” ratings of 3 out of 10, earned its massive upgrade within a few hours of trading as the ETF dropped by more than 2%. In its first significant pullback since climbing back into bull market territory early in the second half of January, EZA is set to open in oversold territory when trading begins on Monday.
Traders looking for broader exposure to the current weakness in emerging markets stocks also have the iShares MSCI Emerging Markets Index Fund ETF (NYSE: EEM) as an option. Consisting of stocks from a variety of emerging markets nations such as China, Russia and Brazil, EEM dropped by more than 2% on Friday to close lower for a second day in a row.
Shares of EEM earned a four-point ratings upgrade early in Friday’s session, joining EWZ and EZa in the “consider buying” category of funds for Monday, and have a short-term, positive edge of just over 1%.
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David Penn is Editor in Chief of TradingMarkets.com