Bad Week To Be A Bear

by on October 29, 2011 | ETFs Mentioned:

The bulls came rushing back last week and equity indexes soared, bolstered by solid corporate earnings at home coupled with encouraging developments in the Euro zone. Investors were more than cheerful to see EU leaders take the first steps towards negotiating on a viable “rescue plan” to ensure stability in the financially fragile currency bloc. Confidence in the global economic recovery is slowly, but surely, improving and investors are gradually reallocating capital back into equities. Gold soared amidst the optimism, as inflation fears resurfaced following the announcement of the $1.4 trillion Euro zone “bailout”. Futures for the precious metal hit a fresh multi-week high of $1,754 an ounce early Friday morning and settled just a few dollars lower to close out the week.

Actionable ETF Trade Ideas

Last Week’s Actionable ETF Ideas
Ticker Position Performance
CORN

Long


+0%
TUR

Long


+7.8%
DBB

Long


+1.7%

Our picks from Monday’s Insider fared quite well this week, as we were able to lock in profits on two of our recommendations, while our third one was a bit directionless. 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 25 all-ETF model portfolios].

Trade #1 Long CORN: Up 0%

This recommendation was disappointing seeing as how CORN ended the week not too far from where it opened on Monday morning. Surprisingly, futures prices for the yellow grain traded sideways during one of the strongest weeks on Wall Street. CORN failed to close above its 200-day moving average and this ETF remains right at the $44 resistance level. Traders looking to get long at current levels ought to consider a stop loss at $42 a share, with a near-term price target of $46 a share over the next month.

Trade #2 Long TUR: Up 7.8%

Our technical analysis served us well in this recommendation as TUR climbed higher throughout the week. This ETF started the week off with a nice rally, backed by high-volume trading, confirming our bullish suspicions. TUR extended gains into Tuesday and Wednesday, while on Thursday this ETF surged past the $50 level, once again backed by high-volume trading. We locked-in profits at $50 a share as outlined in Monday’s edition of ETF Insider, leaving us with a hefty 7.8% gain in less than a weeks time. We advise conservative traders to consider getting in long again after TUR establishes definitive support above the $50 level in the coming days.

Trade #3 Long DBB: Up 1.7%

This was our fundamentally defensive pick for the week and DBB fared quite well, and perhaps our only mistake with this recommendation was selling too soon. DBB opened much higher than anticipated on Monday morning, and the fund held onto its gains throughout the week, charging past resistance at both the $19 and $20 levels. We stuck to our rules and sold DBB at $19.50 a share on Monday afternoon, locking-in a respectable 1.7% gain. Bullish momentum is certainly building up in shares of DBB and we advise conservative traders to move their stop-loss up to the $20 level in an effort to greatly minimize downside risk and protect profits.

ETFdb Portfolios

Retirement ETFdb Portfolios

Stock markets finished the week in bright green territory and so did all our model retirement portfolios. Our Aggressive Portfolio led the way higher, thanks to its heavy equity allocation, while our most conservative Ready To Retire Portfolio lagged behind. From a year-to-date perspective all but one of our portfolios are in positive territory, with our Ready To Retire still leading the pack.

ETFdb Portfolio Weekly Return YTD Return
Aggressive 5.61% -1.56%
20 Years To Retirement 4.50% 1.40%
30 Years To Retirement 4.46% 1.59%
Cheapskate 3.75% n/a
Moderate 3.66% 2.89%
10 Years To Retirement 3.59% 2.47%
5 Years To Retirement 2.81% 3.21%
Ready To Retire 2.14% 5.42%

Themed Portfolio

Our themed portfolios appreciated nicely this week alongside a strong equity market, with many turning in positive year-to-date performances for the first time in a while. Emerging market equities stages an impressive rebound last week and our LatAm Centric Portfolio led the way higher, while our defensive Better-Than-AGG and Sky Is Falling portfolios lagged behind. From a year-to-date performance perspective, our Simple (But Effective) Safe Haven Portfolio is the only with double digit gains, while the Emerging & Frontier Markets Portfolio sits at the bottom of the barrel.

ETFdb Portfolio Weekly Return YTD Return
LatAm Centric 7.63% n/a
Euro Free Europe Portfolio 6.25% n/a
RAFI 6.15% -4.91%
Emerging & Frontier Markets 6.08% -7.54%
Black Swan Hyperinflation 5.82% 3.05%
Ex-U.S 5.72% -4.30%
Small Cap 5.60% n/a
Asia-Centric 5.46% -5.69%
Commodity Guru 5.25% n/a
Equal Weight 5.20% n/a
AlphaDEX 5.15% n/a
Ex-Europe 3.84% 1.17%
Global Titans 3.76% n/a
Alpha Seeker Portfolio 2.0 3.62% 0.75%
High-Tax Bracket 3.56% 1.00%
High Yield 3.30% 5.26%
Actively-Managed 3.23% 2.11%
Simple (But Effective) Safe Haven 2.77% 10.25%
Ben Graham 50/50 2.70% n/a
Better-Than-AGG Total Bond Market 1.13% n/a
The Sky Is Falling 0.47% 5.30%

New ETF Highlights

The exchange-traded universe continues to expand in October, although this week was a bit quiet on the product development front with only two new funds hitting the street. Check out our ETF Launch Center for complete updates on all new ETFs.

ETF Launches

Global Big Pharma ETN (DRGS)

RBS rolled out DRGS, which tracks the NYSE Arca Equal Weighted Pharmaceutical Total Return index. This index seeks to measure the performance of equity securities of global companies involved in various aspects of the development, production and marketing of pharmaceuticals.

Australia & New Zealand Debt Fund (AUNZ)

WisdomTree launched AUNZ, which seeks to capture the total returns of Australian and New Zealand debt. The underlying debt securities are denominated in either Australian or New Zealand dollars. This ETF is a conversion of Wisdom Tree’s Dreyfus New Zealand Dollar fund, which previously traded under the ticker BNZ.

Disclosure: No positions at time of writing.