NEW YORK (TheStreet) -- The Market Vectors Egypt ETF (EGPT) - Get Report, which became an overnight success since the country's crisis began in late January, could become even more bloated with cash this week as further delays in Egypt combine with an existing creation halt. Investors should either avoid this fund entirely or understand the implications of short-term trading.

Since Jan. 28, Egypt's stock markets have been at a standstill after protest sent shares tumbling. Soon after, EGPT managers halted the creation of new shares of the ETF, citing the inability of authorized participants and fund managers to take incoming cash, buy EGPT's underlying components and release new shares of the ETF into the market to sate demand. While the redemption process remained untouched, both creation and redemption are needed in order to provide accurate pricing and trading of an ETF.

Before

protests and crisis swept Egypt, the EGPT ETF remained relatively unknown. Launched just shy of one year ago (Feb. 16, 2010), trading volume in the fund was extremely low until the halt of trading in Egypt spurred investors to seek out other alternatives. Just as the financial crisis in 2008 -- and the resulting "short ban" on financial stocks -- made the

ProShares UltraShort Financials ETF

(SKF) - Get Report

an overnight star, investors with an interest in Egypt -- and nowhere else to turn -- helped to make the previously unknown EGPT one of the most talked-about funds overnight. Cash flooded the fund -- 38% of the fund's holdings are in "cash" currently -- and shares almost immediately traded to a premium.

This week, existing issues with the fund will only intensify: with the crowds dispersing, investor interest growing, and the Egypt stock market remaining closed, EGPT could face bigger pricing problems than ever.

EGPT is supposed to track an underlying basket of Egyptian stocks, but with the stock market closed, the fund tracks an approximation of the value of an underlying basket of Egyptian stocks -- reflecting:

1. What investors believe that they might be worth

2. Demand for the ETF itself, which is different than demand for a fund's underlying components

3. Hope, that when the markets re-open that stocks will react in a positive way

In essence, while EGPT's price is influenced by a number of factors, it does not provide the exposure promised in the fund's prospectus since Egypt's exchange has been halted and a creation halt has been in place for weeks.

One important result of this combination of factors is that EGPT is now trading at a massive premium. When Mumbarak stepped down on Friday, investors flooded EGPT and by 4:00 PM EST, EGPT's shares ended the trading day at a 14.51% premium to NAV. Since EGPT's authorized participants cannot create new shares, this premium may reach ridiculous levels in the week ahead.

Let's first assume that investors continue to be positive on Egypt's stock market during the week ahead. Since Egypt's officials estimate that the Egyptian stock market won't be open for trading until Sunday, EGPT will remain the fund-of-choice for many international bulls looking for a way to gain exposure. With creation cut off -- and with the pricing of the fund driven by speculation and demand for EGPT itself -- the premium bubble will only grow. When the Egyptian stock market resumes normal activity, this bubble will burst as shares fall back in-line with NAV and liquidity could dry up leaving everyday traders stuck selling their previously-overpriced shares at deep discounts.

If questions about Egypt's ability to

resume day-to-day economic activities (banking, commerce, etc.) begin to cast a negative light on the country, it's possible that EGPT's shares could sell off and begin trading at deep discounts. Without the day-today trading of EGPT's underlying components, it is impossible to know what the NAV of the fund really is. If opinion turns negative, it is just as easy for pricing problems to work against the fund on the downside.

Either way, EGPT is a perilous fund to be involved in while the Egyptian stock market -- and, subsequently, the fund's underlying components -- remain closed and creation remains suspended. EGPT, instead, should be used as an indicator of investor sentiment about Egypt and avoided for all practical purposes during trading this week.

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Carolyn Dion is an analyst and associate editor for the Fidelity Independent Adviser family of newsletters, Dion Money Management's affiliate newsletter company. A former ETF specialist and NYSEArca lead market maker, Dion provides analysis on the exchange-traded product industry.

In addition to her role as analyst and editor, Carolyn is vice president of Dion Money Management, a fee-based investment advisory firm, where she assists in the development of ETF strategies. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages more than $530 million in assets for clients in 49 states and 11 countries.