5 Influential ETFs Hold Back U.S., International Stocks

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) -- There are roughly 1,400 exchange-traded vehicles on the U.S. exchanges. And yet, only a small fraction of them (about 5%) can lay claim to $1 billion in assets under management.

These 70-to-75 influencers often explain the direction of stock, bond, currency and commodity markets. In fact, there have been times when a single asset defines the entire investing landscape.

For example, PowerShares DB U.S. Dollar Bullish (UUP) is frequently employed as a “risk-off” portfolio hedge. In the recent past, when UUP moved higher, you could confidently count on equity and commodity weakness. Conversely, when UUP moved lower, high beta assets like stocks soared in what many described as a ”risk-on” rally.

Of course, influential indicators change over time. PowerShares DB U.S. Dollar Bullish has actually gained ground since late October/early November, even as stock assets have appreciated dramatically in value.

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At present, five ETFs that currently reside below respective long-term trendlines (i.e., 200-day exponential moving averages) may be holding back riskier assets. While the current weakness in these ETFs do not necessarily portend doom, they certainly portray a less-than-rosy backdrop for risk-taking.

1. Questionable Demand for Materials — iShares MSCI Brazil (EWZ). One might think that an investment by the name of iShares Global Materials (MXI) could tell you all you need to know about worldwide manufacturing growth. However, iShares MSCI Brazil typically moves in lock-step with MXI… and the trading volume for EWZ is far more robust. Simply put, if China isn’t importing, resources-rich Brazil isn’t exporting enough to satiate the appetite of global growth investors.

2. Slow-Going For “Big Oil” — SPDR Select Sector Energy (XLE). Many analysts have been touting the current market as “earnings driven.” Yet price-to -earnings ratios for integrated oil corporations have seldom been this attractive, especially after a horrific 2011 and a 2012 characterized by underachievement. Threats of geo-political interference, additional taxation and regulation may be part of the trouble; more likely, economic contraction in Europe continues to hinder the big daddy of energy, XLE.

3. The Debt Crisis That Keeps on Giving — Vanguard Europe (VGK). Some stock funds are within a percentage point of 52-week highs. In contrast, equity investments in Spain and Greece sit near 52-week lows. Ongoing fears of debt contagion spreading to France, Sweden, Austria… you name it… has pushed VGK back below a 200-day exponential moving average.

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