When looking at Big Money ETF buys and sells below from MAPsignals.com, the deep red bars on the right side of the chart reflect the recent selling. In fact, this is the most ETF selling we’ve seen since the COVID-19 pandemic hit markets hard in March 2020:
Source: www.mapsignals.com
When markets move like this, the hysteria can entrap great assets and cause them to be sold off. To identify those “unfairly hit,” long-term investors need to look for ETFs (and their stocks) with great setups.
Remember: ETFs are just baskets of stocks, so we need to look at them in detail. MAPsignals specializes in scoring more than 6,500 stocks daily. If I know which stocks compose the ETFs, I can apply stock scores to the ETFs. Then I can rank them all from strongest to weakest.
Let’s get to the five best oversold ETFs to buy for March 2022.
#1 Consumer Discretionary Select Sector SPDR Fund (XLY)
This ETF has been getting hammered this year. That isn’t surprising given the overall growth slide and other headwinds. XLY has been caught in the flood. But Big Money has been buying XLY in chunks over the last year:
Despite the recent decline, XLY holds several solid stocks. One example is its second-largest holding, Telsa Inc. (GOOGL). Here is the Big Money action on GOOGL since 2017 – look at that rise:
#2 Vanguard Information Technology ETF (VGT)
When there are unusually big sells on otherwise fundamentally strong ETFs, it’s usually a time to buy. That could be the case now with VGT. It holds some of the biggest, most successful tech stocks out there. Their ability to bounce back is appealing, as is the growth of VGT:
One great stock among the VGT top holdings is NVDIA Inc. (NVDA). It’s a long-time Big Money favorite with awesome fundamentals, as the multi-year Top 20 chart below shows:
#3 iShares U.S. Home Construction ETF (ITB)
If you want to ride the U.S. housing wave, ITB is a reliable vehicle. Big Money likes this construction ETF because it holds tremendous housing stocks. Given its quality, I think this could be a great opportunity to get a solid ETF at a discount price:
The largest holding within ITB is D.R. Horton, Inc. (DHI). It’s an outlier stock that has been a Top 20 Big Money buy many times since 2015:
#4 iShares Semiconductor ETF (SOXX)
Semiconductors are in pretty much everything modern humans use daily, and they’re in short supply right now, so demand should be strong for a while. SOXX is full of solid growth companies under selling pressure and could be an opportunity:
One company within this ETF that’s been uneven but could still flourish is Qualcomm Inc. (QCOM). Big Money loves it. The multi-year QCOM chart of Big Money activity says don’t bet against it:
#5 First Trust Cloud Computing ETF (SKYY)
This ETF has been dropping since November 2021, but it still has lots of potential. SKYY holds solid companies focused on a critical business need with big growth potential. So, it may still be an outlier.
One great stock in SKYY is Alphabet Inc. Class A (GOOGL), Google’s parent company. Like many tech stocks, it’s fallen back lately, but it still has a phenomenal long-term trend and is SKYY’s top holding. Looking at the Top 20 buys, it’s clear Big Money has loved GOOGL since it began trading:
Here’s a Big Money recap:
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When Big Money buying pours in, stocks tend to go up
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Red selling on great quality can be a tremendous opportunity
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Repeated buying usually means outsized gains
Fair or not, all these ETFs have been hit hard this year due to their growth-oriented focus. But that doesn’t change the fact they hold great stocks that could rise in the future. That’s why I think these oversold ETFs represent great potential bargains.
The Bottom Line
XLY, VGT, ITB, SOXX, and SKYY are my best oversold ETFs to buy now for March 2022. These picks are poised to do well going forward, in my opinion, largely because they each hold great stocks. They may be experiencing selling pressure, but on quality assets, deep red days often prove to be fire sales over time.
To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com
Disclosure: at the time of publication, the author holds no positions in XLY, VGT, ITB, SOXX, SKYY, TSLA, NVDA, or DHI, but does have long positions in QCOM and GOOGL in managed or personal accounts.
Investment Research Disclaimer
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This article was originally posted on FX Empire
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