Mr. Market’s Wild Ride

by on August 13, 2011 | ETFs Mentioned:

All aboard the roller coaster! Market activity this past week was all sorts of absurd; equity indexes fluctuated wildly between huge gains one day and devastating losses the next. Investors are still visibly shaken from the debt ceiling drama of last week coupled with S&P’s downgrade of U.S. credit quality, which triggered a brutal sell off on Monday to start the week. Wall Street seemingly regained its balance on Tuesday, only to sell-off in the final hours of trading after Bernanke announced the Fed’s intent to keep rates unchanged until mid-2013. Fear in the markets continues to pave the way higher for gold and the precious metal yet again soared to new all-time-highs, hitting $1,817 an ounce on Wednesday evening. Against this chaotic backdrop, nearly all model ETF portfolios were deep in losses this week, while our cautious analysis served us quite well during one of the worst weeks on Wall Street.

Actionable ETF Trade Ideas

Our picks from Monday’s Insider fared quite well during one of the most unpredictable weeks on Wall Street. Careful and prudent technical analysis saved us from entering two trades that would have gone practically nowhere, while our short position turned out to be solid as well–although a bit mistimed. We highlight the performance of our three trade ideas below [sign up for a free ETFdb Pro trial to get more actionable ETF ideas every week]:

Trade #1 Long FXC: No Trade

FXC was positioned quite nicely prior to Monday’s opening bell, and the fund appeared poised to bounced higher off its 200-day moving average. However, investor’s pessimistic sentiment  took charge on Monday and selling pressures hit virtually every corner of the market and FXC opened and tumbled below our outlined support at $102 a share. Were holding off on this trade for now until some of this “fear” in the markets evaporates and the fund clearly establishes support above $102 a share.

Last Week’s Actionable ETF Ideas
Ticker Position Performance







Trade #2 Short EPU: +2.8%

Our recommendation to short EPU was mistimed this week. Although we correctly anticipated the gap lower on Monday, this ETF managed to hold its ground and float above $36 a share for the remainder of the week. On Wednesday we advised conservative investors to close this short position since the fund would likely bounce higher, and our near term target of $39 a share proved to be correct on Friday. EPU still looks very weak from a technical perspective, however, and we advise conservative investors to hold off until market volatility cools off a bit.

Trade #3 Long DBA: No Trade

This was meant to be our defensive position for the week and we weren’t really surprised when it didn’t follow our technical analysis since virtually every asset class took a beating in the first half of the week. No trade here this week, since DBA unfortunately opened below our outlined support at $32 a share on Monday. The fund did manage to climb above $32 a share on Thursday and Friday, however, were not compelled to jump in until momentum builds and DBA rises above its 200-day moving average. 

ETFdb Portfolios

Retirement ETFdb Portfolios

Investor worries throughout the week put downward pressure on equity markets, which sank almost all of our long-term portfolios into red territory. Fixed-income holdings are shining bright amidst all of this uncertainty however, seeing as how the “closer to retirement” portfolios are holding their ground fairly well, even from a year-to-date perspective:

ETFdb Portfolio Weekly Return YTD Return
Ready To Retire 0.38% 2.36%
5 Years To Retirement -0.27% -1.37%
Moderate -0.35% -1.14%
Cheapskate -0.45% n/a
10 Years To Retirement -0.58% -2.39%
30 Years To Retirement -0.79% -4.06%
20 Years To Retirement -0.81% -4.07%

Themed Portfolios

Equity weakness put the majority of our themed ETFdb portfolios in a tough spot this week, while our defensive “Sky Is Falling” portfolio even managed to turn a decent size gain during one of the most volatile weeks on Wall Street in a long while. From a year-to-date perspective, our RAFI and Emerging & Frontier Markets portfolios remain the weakest, while these two were also the biggest losers during the week.

ETFdb Portfolio Weekly Return YTD Return
Sky Is Falling 1.77% 3.03%
Black Swan Hyperinflation 1.26% 2.99%
Ex-Europe 0.11% -2.31%
Alpha-Seeker 2.0 -0.54% -2.48%
High Yield -0.55% -1.57%
Asia Centric -0.56% -4.76%
Ben Graham 50/50 -0.62% 1.10%
Actively Managed -0.64% -2.84%
High Tax Bracket -0.64% -2.00%
Equal Weight -1.04% n/a
Small Cap -1.18% n/a
Ex-U.S. -1.20% -4.96%
Emerging & Frontier Markets -1.39% -6.41%
RAFI -2.12% -10.29%

New ETF Highlights

Despite the wild swings on Wall Street, this week turned out to be fairly uneventful for the ETF industry as only one new product launched on the market [see the ETF Launch Center for updates on all new ETFs].

ETF Launches

EGShares India Consumer ETF (INCO)

EGShares, the only U.S.-based ETF issuer focused exclusively on emerging markets funds, added INCO to its lineup this week. The new ETF is the first of its kind to offer targeted exposure to the consumer-goods sector of the Indian stock market. Sub-sectors also included in the underlying index of INCO are automobiles (15%), personal products (15%), media (10%), textiles (10%), food products (9%), and beverages (7%).

Disclosure: No positions at time of writing.