ETF Insider: Don’t Try To Catch The Falling Knife
Sat, Nov 17, 9:15 AM ET, by Michael Johnston
Investors endured a painful week of profit-taking on Wall Street as post-election worries over the looming “fiscal cliff” have taken center stage. Overseas, European policymakers did what they do best: kick the can down the road. Finance ministers from the currency bloc agreed to postpone Greek austerity talks yet again, giving an extension through November 20. At home, weekly jobless claims came in above expectations as Hurricane Sandy took its toll on the domestic labor market recovery [see Free 7 Simple & Cheap All-ETF Model Portfolios].
Actionable ETF Trade Ideas
|Last Week’s Actionable ETF Ideas
Our picks from Monday’s Insider posted sour performance results as profit-taking pressures reigned supreme on Wall Street throughout the entire week. Below, we highlight how our trade ideas fared during the week [sign up for a free trial of ETFdb Pro to get actionable ETF ideas every Monday, as well as access to more than 45 all-ETF model portfolios].
Trade #1 Long IYT: Down 1.3%
This recommendation kicked off the week on an encouraging note as IYT traded higher, settling right around $90 a share. Wednesday proved to be an absolutely dismal trading session as stocks across the board took a nosedive, with IYT following the broader market lower. Our stop-loss at $88 a share was triggered and we cut our losses, which ended up serving as well seeing as this ETF closed below $87 as share on Friday.
Trade #2 Long GDX: Down 3.4%
This recommendation suffered serious losses this week as profit-taking pressures hit gold futures prices and mining equities alike. GDX traded sideways all of Tuesday, offering some hope for a bounce higher, however, selling pressures prevailed in the following sessions. We cut our losses at $49 a share as outlined, which served us well as GDX settled below $46.50 a share on Friday.
Trade #3 Long XLF: Down 2.1%
This recommendation traded sideways in the first half of the week only to give into profit taking pressures on Wednesday like virtually every other asset class. XLF slid right past our outlined stop-loss at $15.25 a share on Wednesday afternoon, leading us to incur yet another frustrating loss on the week.
Retirement ETFdb Portfolios
Our Cheapskate Portfolio proved to be most resilient among our retirement strategies this week, while our equity-heavy 30 Years Til Retirement Portfolio, not surprisingly, turned in the worst performance.
As Of 11-15-2012
Regional ETFdb Portfolios
Looming debt drama in Europe coupled with “fiscal cliff” woes at home prompted investors to scale back on risk exposure all over the globe. Despite escalating tensions in the Middle East, our Asia-Centric Portfolio came out on top this week while our Africa-Centric Portfolio came in at the bottom of the barrel.
As Of 11-15-2012
Themed ETFdb Portfolios
Amid weakness on the stock front, our Better-Than-AGG Total Bond Market Portfolio managed to turn in a fairly flat performance while every other strategy sank into red territory. Among the worst performers this week were the GLD-Free Gold Bug Portfolio and the Mining Boom ETFdb Portfolio.
As Of 11-15-2012
Disclosure: No positions at time of writing.
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