The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK ( ETF Expert) -- The CBOE Volatility Index (VIX) closed more than 10% above its long-term 200-day moving average. That hasn't happened since August of 2010, back when investors fretted the possibility of a double-dip recession.
Today, the worries are more cumulative in nature. Uncertain job growth, depressed home values, debt troubles in Europe, rising commodity prices, the threat of rising rates, inflation in Asia, civil unrest in Libya, and now, nuclear radiation levels in Japan.
In spite of a laundry list of concerns, and in spite of a -17% 2-day collapse in Japan's Nikkei stock market average, the S&P 500 has pulled back a mere -4.6% from multi-year highs. Even when one looks at the intra-day high to pullback low, it's only -6.1%.There are several interpretations one might give for the relative resiliency. One, investors may view the tragedy in Japan and the Middle East-inspired spike in oil as "temporary." If that's the prevailing viewpoint, then there's little reason to be uneasy about the global economy's longer-term well-being. A second possibility? Envy. Yes, envy! More specifically, scores of investors missed the remarkable gains in 2009 and in 2010. They've repositioned assets in 401k stock funds and they've returned to investment advisers for guidance. Stock fund managers are buying every dip with the extra cash, while money managing advisers are doing the same. The envy hasn't reached "irrational exuberance" levels of greed, but envy is playing a part. A third interpretation? Investors are shrewdly focusing on positives for stock assets -- from strength in manufacturing to corporate earnings growth to easy-money Fed policy. Of course, the latter probably accounts for the timing of Egyptian/Libyan/Tunisian unrest, but you'll never hear Bernanke admit to it. Whether investors have bull market envy, or whether they view the current geopolitical risks as temporary, or whether they've returned to an analysis of P/E ratios, nobody should ignore ETFs that have "corrected." Here's an overview of key Country ETFs and key Sector ETFs that have pulled back 10%+:
|Sector Corrections of 10%+|
|Market Vectors Nuclear Energy (NLR)||-21.1%|
|Market Vectors Rare Earth Metals (REMX)||-13.8%|
|iPath Agriculture (JJG)||-12.0%|
|Global X Copper Miners (COPX)||-11.6%|
|Global X Silver Miners (SIL)||-11.3%|
|SPDR S&P Semiconductor (XSD)||-10.3%|
|Guggenheim Airline (FAA)||-10.3%|
|Country Sector Corrections of 10%+|
|Market Vectors Small India (SCIF)||-24.1%|
|Market Vectors Vietnam (VNM)||-21.4%|
|iShares Small Cap Japan (SCJ)||-14.5%|
|iShares Chile (ECH)||-13.8%|
|iShares Peru (EPU)||-10.6%|
|Global X Columbia (GXG)||-10.0%|
|iShares MSCI Turkey (TUR)||-10.0%|
Market Vectors Nuclear Energy (NLR)? I don't see any confidence returning to the sector for years. NLR is destined to become a day-trading tool with regulators debating the risks of a previously promising alternative energy source.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.