Pessimism Prevails

by on November 19, 2011 | ETFs Mentioned:

Equity indexes endured another volatile week as persistent Euro zone debt woes paved the way for profit-taking across virtually every segment of the market. Investor worries over the debt crisis brewing overseas overshadowed positive economic data releases on the home front, including better-than-expected retail sales, new home starts, jobless claims, and industrial production. Fundamental investors are likely scratching their heads in disbelief, seeing as how domestic stocks completely ignored the good news this past week, but instead focused on the worrisome political drama plaguing the debt burdened currency bloc. Even gold fell victim to profit taking, as futures prices for the precious yellow metal inched lower throughout the week, settling near $1,725 an ounce.

Actionable ETF Trade Ideas

Last Week’s Actionable ETF Ideas
Ticker Position Performance
EWA

Short


+4.8%
IBB

Long

-2.2%
LQD

Long

-0.4%

Our picks from Monday’s Insider performed surprisingly well as whole, with our short position turning in a hefty profit that more than made up for the losses incurred in our other two trades. 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 30 all-ETF model portfolios].

Trade #1 Short EWA: Up 4.8%

This recommendation got off to a strong start on Monday morning as EWA opened below Friday’s close, setting the scene for further declines. This ETF drifted sideways on Tuesday, although escalating Euro zone debt woes paved the way lower through the end of the week. EWA came close hitting our price target at $22 a share on Thursday, missing it barely by just a few pennies. Nonetheless, this trade turned out to be successful as we were able to lock-in a solid 4.4% gain as the trading week drew to a close.

Trade #2 Long IBB: Down 2.2%

This ETF got off to seemingly strong start as it was able to hold its ground on Tuesday, while broad equity indexes plunged lower. IBB didn’t turn out to be as resilient as we had anticipated and this ETF gave into selling pressures on Wednesday. This ETF extended its losses into Thursday, triggering our stop-loss at $93 a share, leaving us with a 2.2% loss on the week.

Trade #3 Long LQD: Down 0.4%

This was our fundamentally defensive pick for the week and unfortunately LQD failed to take on safe haven appeal amidst all of the Euro zone uncertainty as we had hoped for. This ETF was able to hold support at the $113 level on Monday and Tuesday, however the bears took charge on Wednesday. This ETF slipped below our stop-loss at $113 a share, leaving us with a small 0.4% loss for the week. Our technical analysis served us well seeing as how LQD plunged even lower on Thursday and Friday, ending the week at $112.15 a share.

ETFdb Portfolios

Retirement ETFdb Portfolios

Stock markets finished the week in negative territory, which ended up boosting returns for many of our retirement portfolios given their sizeable fixed income allocations. In fact, our 10 Years To Retirement portfolio clawed its way back into positive territory for the year. Our most conservative Ready To Retire portfolio continues to lead the way higher, while the Aggressive portfolios sits at the bottom of the barrel in terms of year-to-date performances.

ETFdb Portfolio YTD Return
Ready To Retire 4.86%
5 Years To Retirement 2.00%
Moderate 0.91%
10 Years To Retirement 0.45%
20 Years To Retirement -1.30%
30 Years To Retirement -2.43%
Aggressive -4.87%
Cheapskate n/a
Low Volatility n/a

Themed Portfolio

Our themed portfolios took a hit this past week as ongoing volatility in the markets took its toll on our equity-heavy portfolios. Profit taking was prevalent all over the globe, and our internationally themed portfolios didn’t hold up any better than the domestic ones. Escalating uncertainty stemming from overseas pushed our ultra-defensive Sky Is Falling portfolio to the top of the list. The Simple (But Effective) Safe Haven portfolio is now the second strongest performer, while our Africa-Centric portfolio remains brutally beat down from a year-to-date perspective.

ETFdb Portfolio YTD Return
The Sky Is Falling 7.03%
Simple (But Effective) Safe Haven 6.34%
High Yield 1.96%
Black Swan Hyperinflation -0.77%
Ex-Europe -0.96%
High-Tax Bracket -2.64%
Alpha Seeker Portfolio 2.0 -3.09%
Ex-U.S -8.77%
Emerging & Frontier Markets -10.36%
RAFI -12.35%
Africa-Centric -18.86%
Small Cap n/a
Actively-Managed n/a
Easy-As-ABC n/a
AlphaDEX n/a
Ben Graham 50/50 n/a
Commodity Guru n/a
LatAm Centric n/a
Global Titans n/a
Better-Than-AGG Total Bond Market n/a
Asia-Centric n/a
Africa-Centric n/a
Euro Free Europe Portfolio n/a

New ETF Highlights

The exchange-traded universe continues to expand as several issuers rolled out first-to-market products over the past week. Check out our ETF Launch Center for complete updates on all new ETFs.

ETF Launches

United States Copper Index Fund (CPER)

  • Launch: November 15th
  • ETFdb Category: Metals
  • Structure: ETF
  • Expense Ratio: 0.95%

United States Commodity Funds launched their new US Copper Index fund, CPER, which tracks the SummerHaven Copper Index Total Return. This index seeks to capture the performance of the investment returns from a portfolio of copper futures contracts. These contracts are fully collateralized with 3-month U.S. Treasury Bills.

Social Media Index ETF (SOCL)

  • Launch: November 15th
  • ETFdb Category: Technology Equities
  • Structure: ETF
  • Expense Ratio: 0.65%

Global X launched their Social Media Index ETF, SOCL, which seeks to track the equity performance of companies that are involved in the social media industry. These companies include those who provide social networking, file sharing, and other web-based media applications. The well-known companies, Google and Groupon, are part of SOCL’s top ten holdings.

DB Inverse Japanese Government Bond Futures ETN (JGBS)

  • Launch: November 10th
  • ETFdb Category: Inverse Bonds
  • Structure: ETN
  • Expense Ratio: 0.50%

Invesco PowerShares launched their new DB Inverse Japanese Government Bond Futures ETN, JGBS, which tracks the DB USD JGB Futures Index (-100%). This index seeks to measure the inverse performance of a long position in 10-year JGB Futures.

DB 3x Inverse Japanese Government Bond Futures ETN (JGBD)

  • Launch: November 10th
  • ETFdb Category: Leveraged Bonds
  • Structure: ETN
  • Expense Ratio: 0.95%

Invesco PowerShares introduced their DB 3x Inverse Japanese Government Bond Futures ETN, JGBD, which seeks to measure the inverse performance of a long position in 10-year JGB Futures.

S&P International Preferred Stock Index Fund (IPFF)

iShares launched their new S&P International Preferred Stock Index Fund, IPFF, which seeks to provide exposure to the performance of a select group of preferred stocks. These preferred stocks are selected from non-U.S. developed market issuers and trade in non-U.S. developed market venues. The majority of preferred stocks are issued by businesses involved in the financials and energy sectors.

Disclosure: No positions at time of writing.