With THD, watch how the fund behaves vs. what the headlines say. It has performed well on bad news days, when the casual observer would assume the stock market would be down. If investors have confidence to invest in the face of negative news, it's a positive sign.
iShares MSCI Austria
Romania had a failed bond auction, and Hungary's political leaders said the country could default, claiming that the previous government lied about the true state of the nation's finances. The news also shook Poland, and the Polish currency, the zloty, fell more than 3% on Friday alone.
Among Western European nations, the Austrian banking system has the greatest exposure to Eastern European debt. Back in 2009, investors were watching Austria for signs of banking or sovereign debt problems, but the region held steady as world markets improved. These nations fell off the radar as Greece, Spain and the rest of the PIIGS grabbed attention, but now this problem is back and was responsible for the euro breaking below major long-term support levels.
PowerShares DB Base Metals
Although investors are concerned about a possible slowdown in the Chinese economy, it's the strong dollar and general fear in the markets that have the industrial metals tumbling. All commodities are under pressure, with only a few notable exceptions such as gold and the already pummeled natural gas and sugar. With the broader commodity indices looking bearish, the volatile industrial metals are ripe for a dramatic drop during a global selloff, and DBB has lost 20% since April 30.
iShares Dow Jones US Home Construction
Homebuilders have enjoyed a nice run in 2010 and have outperformed the S&P 500 index by about 8% following Friday's loss. Housing data were good this week, but there was some concern about a drop in mortgage applications that could translate into lower sales by late summer, if the trend continues. It didn't help that some of the bad news on Friday was jobs-related.
At the time of publication, Dion Money Management owned THD.
-- Written by Don Dion in Williamstown, Mass.