Five ETFs That Can Reclaim Their Mendoza Lines

Earlier this year, we took a look at five ETFs that were trading below their Mendoza Lines, or their 200-day moving averages. It's convenient that the Mendoza Line, a baseball term, denotes a batting average of .200. Fall below that and it's hard to justify keeping a batter in the majors no matter how flashy his defense is. When it comes to financial markets, a security that slips below its 200-day line is flashing some ominous signals. On the other hand, a stock or ETF that makes its way back above this important indicator is often believed to be showing some bullish signs. These days, there are no shortage of exchange-traded products residing below their 200-day moving averages. Just under 1,000 ETFs and ETNs out of a universe of just over 1,300 currently trade below the all-important 200-day line. With plenty to pick from, we decided to look for five ETFs that stand a reasonably good chance of reclaiming their 200-day lines in the near future. PowerShares Dynamic Food & Beverage Portfolio PBJ: As we noted in our look at next week's ETFs to watch, PBJ is just pennies away from its 200-day line. On a percentage basis, pennies is about 0.8%. With critical earnings reports looming next week, PBJ is a strong candidate to reclaim its 200-day line in the very near-term. Market Vectos Agribusiness ETF MOO: Several factors make the Market Vectors Agribusiness ETF a prime candidate to get back above its Mendoza Line. First, it's just 8.6% away from doing so. Second, this rally has been a boon for high-beta fare such as what is found in MOO. Third, MOO makes for an excellent long-term holding and investors may be starting to realize that below $50, MOO is attractive. iShares MSCI Chile Investable Market Index Fund ECH: ECH resides 15.6% below its 200-day moving average as of Friday's close. That sounds like a lot and it is, but the risk/reward here is favorable. ECH can be had around $59 with a stop at $50. Once the 50-day line at $60 falls, there is a lot of room back to the 200-day line at $70. If that falls, we're looking at a return to the high-70s. While not probable, it's not impossible that all of this happens before Christmas. First Trust ISE-Revere Natural Gas Index Fund FCG: At 13.1% below its Mendoza Line, FCG has its work cut out for it. That much is true, but we like the ETF's prospects for capturing that 13% if can get at least of the following three factors to go in its favor: The broader market continues to rally, earnings season is stellar for energy names and energy sector M&A heats up in the current quarter. Market Vectors Junior Gold Miners ETF GDXJ: Yes, 14.6% below the 200-day moving average is nothing to smile about. Then again, we like the historical trends that show miners have a tendency to sharply outperform gold bullion after both sell-off. The sell-off appears to be complete and a return to riskier assets will drive mining shares higher through year-end. GDXJ probably won't jump 14.6% in a week to get back to its 200-day moving average, but it could happen in two or three weeks.