|Unique Alternatives for Extremely Overbought ETFs|
Gary Gordon - The Street DEC 10, 2012 3:10 PM
ETFs tracking US home construction and the Philippines have skyrocketed recently. Here are some more reasonably priced ETFs for playing related investment themes.
Chinese leadership continues to provide just enough government support to maintain economic targets. And the European Central Bank is having success at containing its sovereign debt woes, in spite of the region's deepening recession.
Investors that engaged the trends early have profited immensely from price appreciation in certain ETFs. Since June, for example, the iShares DJ Home Construction Fund (NYSEARCA:ITB)
However, if fiscal cliff concerns elevate as 2012 draws to a close, you may see investors with large capital gains in the sector take profits. Apple
It follows that the price of ITB may revert to its mean, or 200-day exponential moving average. That's close to 14% drop from present levels. Moreover, we typically think of assets that are 10% above critical trend lines as being "overbought."
None of these circumstances alter the big-picture theme that real estate may finally be getting out of the dog house. Are there ETF alternatives, then, for profiting from increases in home construction?
I suggest that investors intrigued by property prospects look at global timber companies. Guggenheim Global Timber (NYSEARCA:CUT)
An unflappable ETF throughout most of 2012 has been iShares MSCI Philippines (NYSEARCA:EPHE)
In my estimation, there are better values in funds like iShares MSCI Singapore
There's a feeling by some of the investment community that the European Monetary Union may finally be getting itself out of its three-year nightmare. This has benefited some of the more financially responsible members of the alliance such as Germany and Austria. German stocks have recently hit four-year highs, while iShares Austria
I might be confident that a number of European multinationals -- SAP (NYSE:SAP)
Enter WisdomTree Europe Hedged Equity (NYSEARCA:HEDJ)
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.