A Week In The Green

by on September 17, 2011 | Updated September 19, 2011 | ETFs Mentioned:

The last week was a welcome change of pace for investors, as markets generally cruised higher despite a lack of meaningful good news that traditionally accompanies such rallies. Attractive entry points finally drove some back into risky assets, though significant uncertainty remains over the outlook from here–especially with parts of Europe now precariously teetering on the brink of fiscal collapse.

Actionable ETF Trade Ideas

Last Week’s Actionable ETF Ideas
Ticker Position Performance
EWZ

Short

n/a
XLK

Long

+5.4%
UUP

Long

-0.8%

Our picks from Monday’s Insider fared quite well this week. Our technical analysis of EWZ helped us to avoid from jumping into a losing trade, while our recommendation to long XLK turned into a very profitable trade in just a few short days. 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 20 all-ETF model portfolios].

Trade #1 Short EWZ: No Trade

We recommended taking a short position in this ETF so long as shares closed below the $60 level. Although EWZ did manage to close at $59.99 a share on Wednesday, we still refrained from shorting this ETF given its rally into the close. We remain on the sidelines and our conservative analysis helped us to avoid a loosing trade.

Trade #2 Long XLK: Up 5.4%

This trade recommendation was spot-on, as we advised investors to get in long, and get out at the $24.50 a share level, leaving us with a respectable 5.4% gain  in just a few days. In terms of upside, the next level of resistance for XLK comes in at below $26 a share, at which point this ETF may encounter some profit taking as it attempts to summit past the technically significant 200-day moving average.

Trade #3 Long UUP: Down 0.8%

This was our fundamentally defensive position for the week and it drifted a bit lower as improving sentiment in the equity markets put downward pressure on the U.S. dollar in the currency markets. Our outlined support level t $21.50 remains unchanged and were holding onto this ETF since were not entirely convinced equity markets can sustain their current “rebound” so to speak. Also, the debt crisis in Europe is far from over and investor uncertainty will remain high until an actual plan of action is announced by lawmakers. Any bad news regarding the debt drama overseas, or disappointing economic data at home, are sure to spark quick sell-offs given the fragile nature of financial markets over the past two months.

Given the developments in Greece over the weekend, we like this position going forwards; the euro is coming under new pressure that seems unlikely to ease up any time soon.

New ETF Highlights

September continues to be a busy month as more new funds and first-to-market product continue to hit the street. QuantShare added three new funds to their market neutral lineup of offerings while UBS rolled out a pair of hyper-targeted technology ETNs. Check out our ETF Launch Center for complete updates on all new ETFs.

ETF Launches

U.S. Market Neutral Funds

  • Launch: September 13th
  • ETFdb Category: Long-Short
  • Structure: ETF
  • Expense Ratio: 0.81%

QuantShares, a newcomer to the ETF industry, expanded its suite of “market neutral” funds, adding three new funds to this intriguing group. Market neutral strategies are nothing new, but the combination of these strategies with the ETF wrapper is a relatively new innovation that allows investors to access these techniques in a low maintenance, relatively cheap vehicle. To learn more about each of the new products click on any one of the tickers below:

  • U.S. Market Neutral Beta Fund (BTAH)
  • U.S. Market Neutral Anti-Beta Fund (BTAL)
  • U.S. Market Neutral Value Fund (CHEP)

E-TRACS ISE Solid State Drive Index ETN (SSDD)

  • Launch: September 14th
  • ETFdb Category: Technology Equities
  • Structure: ETN
  • Expense Ratio: 0.65%

UBS launched its latest exchange-traded product targeting the small, but quickly growing, solid state drive industry. The new ETN will seek to replicate a benchmark comprised of drive manufacturers and component manufacturers, and currently consists of 11 companies in total. UBS also debuted a leveraged counterpart to SSDD; the 2x Monthly Leveraged ISE ETRACS ISE Solid State Drive Index ETN (SSDL) will deliver monthly results that correspond to 200% of the change in that same index.

PowerShares Fundamental Investment Grade Corporate Bond (PFIG)

  • Launch: September 15th
  • ETFdb Category: Corporate Bonds
  • Structure: ETN
  • Expense Ratio: 0.22%

PowerShares, one of the leading providers of alternative weighted ETFs, rolled out its latest fund offering exposure to the corporate bond market. PFIG will seek to replicate the RAFI Investment Grade Corporate Bond Index, a benchmark that assigns weightings based on an issuer’s ability to service debt. Specifically, the RAFI methodology utilizes four fundamental measures of firm size, including book value, sales, dividends, and cash flow.

Oil Trendpilot ETN (TWTI)

  • Launch: September 15th
  • ETFdb Category: Oil & Gas
  • Structure: ETN
  • Expense Ratio: 1.10%

RBS rolled out the fourth product in its Trendpilot suite, with this latest offering tracking the RBS Trendpilot Index, a dynamic benchmark that oscillates between oil futures and cash depending on recent price trends. TWTI will switch exposure based on a rules-based strategy which considers where the RBS 12-Month Oil Total Return Index is trading relative to its 100-day simple moving average.

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Disclosure: No positions at time of writing.