Four Forgotten ETFs To Consider On A Pullback

Let's be realistic: Friday's price action combined with what we're seeing today isn't encouraging for the bulls. A close below 1,295-1,297 on the S&P 500 would be bearish and if a few of those were strung together, it probably means we're headed to 1,275.

If a retreat to the 1,275 proves to be the dip that everyone has been waiting for, it will be bought and preparation will be key, so the Professor decided to look for a few "buy-on-the-dips" candidates that don't get a lot of attention.

1) iShares Dow Jones US Medical Devices ETF IHI:
IHI is an ETF that we highlighted earlier this year and the ETF has surged more than 25% since September, making it ripe for a pullback. That retreat may be in the works right now as IHI is down 2% in the past week, but value can be had here in the $60-$61 area for investors that patient and willing to wait for IHI to head to the high 60s or low 70s by year-end.

2) WisdomTree International MidCap Dividend ETF DIM:
Mid-caps always seem to fit the bill as a forgotten asset class, but this ETF does feature a fair yield of over 3.2% and value can be had here, perhaps in the near-term, because at 16.2%, Japan is DIM's biggest country weight. Of course that means, a better price can probably be had in a few days or next week, so there's no need to hurry into DIM. On the bright side, DIM offers double-digit exposure to four different sectors (financials, materials, industrials and consumer discretionary) and a drop to $50 could set you up for a gain of 10%-15% over the medium-term.

3) Vanguard Value ETF VTV:
VTV is another ETF that has put in a 25%+ run since September and it holds plenty of Dow stocks, exposing the ETF to a potential slide of if the Dow continues to falter. Assuming another 300-500 points get shaved off the Dow, VTV becomes an alluring prospect in the low-50s. Starting a position at $53-$54 won't look so bad if VTV finds its way to the low 60s by year-end. Continued dividend increases should also boost this fund going forward.

4) PowerShares S&P SmallCap Consumer Staples ETF XLPS:
Despite being a play on a very defensive sector, XLPS might be the highest-risk ETF of those highlighted here by virtue of an ugly chart. Continued broader market weakness could subject XLPS to another $2 of downside, but if the ETF finds support at its 200-day line around $27.25, the upside from there could be another $4 or $5 for the investor with a six- to nine-month time horizon.