This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

3 Reasons for Caution on Stock ETFs

Stocks in this article: BIK EWY

2. Canada and Australia. Even if one is quick to dismiss the emerging-market underperformance, how can one be quick to dismiss the strongest economies (at present) in the developed world? Australia and Canada are both projected to grow at a faster clip in 2012 than the U.S.; Canada and Australia both have a better employment situation.

Nevertheless, the S&P SPDR Trust (SPY) picked up 5.4% in five days, while iShares MSCI Australia (EWA) logged a feeble 0.4% and iShares MSCI Canada (EWC) registered a paltry 0.8%. This one can't even be blamed on faltering currencies, as the CurrencyShares Canadian Dollar (FXC) gained roughly 1.5% on the dollar over the week.

One might say that energy-rich Canada and materials-rich Australia are slumping due to a slowdown in the global growth story. Fair enough. Yet if that slowdown is real, it would hit U.S. equities sooner or later. Once more, without these healthier developed countries rallying, one would need to curb one's enthusiasm for the five-day U.S. phenomenon.

3. Commodities Still Faltering. This week was "risk on" for the U.S. alone. And while that may have a great deal to do with the dollar's gains, relief over Europe and/or perceived safety of U.S. multinationals, there's no ignoring global growth fears.

PowerShares DB Base Metals (DBB) was down 1.0% over the week. iPath DJ Copper (JJC) lost 1.7%. PowerShares DB Agriculture (DBA) lost 3.1%.

Commodity stocks, which do not necessarily correlate with the underlying commodities and frequently correlate with the equity markets themselves, also struggled. Market Vectors Coal (KOL) gave up 0.6%, Market Vectors Rare Earth Miners (REMX) fell 1.1% and copper-heavy iShares MSCI Chile (ECH) lost 4.3%.

We can blame the dollar for some of the angst. Yet the evidence suggests that, even with sovereign debt band-aids, a return to bull market form will require foreign market participation. That is, without global economic growth showing definitive signs of improvement, U.S. stocks can only climb so far.

You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can follow me on Twitter @ETFexpert.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.
2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs