Overview of VFH
The Vanguard Financials ETF (VFH) seeks to track the performance of the MSCI US Investable Market Financials 25/50 Index. As of January 5, 2016, VFH has a market capitalization of $3.4 billion, making it the second largest financial ETF after the Financial Select Sector SDPR ETF (XLF). On average, $3.5 million worth of shares trades hands every day. Also, VFH has an expense ratio of 0.12%. Its largest holdings are Wells Fargo (WFC), JPMorgan Chase (JPM), Bank of America (BAC), and Citigroup (C). These have weights of 6.9%, 6.3%, 4.6%, and 4.3%, respectively, in the VFH ETF.
Moving average analysis
On January 5, 2016, VFH closed at $47.7 below its 100-day, 50-day, and 20-day moving averages of $48.5, $49.3, and $48.6, respectively. Currently, the VFH ETF is trading 1.5% below its 100-day moving average, 3.1% below its 50-day moving average, and 1.9% below its 20-day moving average.
The chart above shows that VFH has broken below its 20-day moving average on December 31 and has been trending downward since then.
The 14-day RSI (Relative Strength Index) for the VFH ETF is 41 as of January 5. This suggests that the stock is approaching oversold levels and may be considered undervalued. An RSI figure below 30 is an indication of an oversold stock while an RSI above 70 denotes an overbought stock.