No Job Hopes For Wall Street Bulls

by on September 10, 2011 | ETFs Mentioned:

Stocks plunged on Friday as investors found little reassurance in President Obama’s most recent proposal to Congress to stimulate the U.S. economy. Similar to the approaches used in 2009, President Obama’s new plan is more of the same old, including tax cut proposals, aid to state and local governments, and more infrastructure spending. European debt-woes continue to escalate, giving investors more reasons to stay on the sidelines as the outlook for the global economy remains gloomy. Persistent uncertainty in the markets has been paving the way higher for gold, and the precious metal surged to a new record high of $1,923 an ounce on Tuesday.

Actionable ETF Trade Ideas

Last Week’s Actionable ETF Ideas
Ticker Position Performance
IYT

Short

-1.6%
KXI

Long

+0%
GXF

Long

-2%

Our ideas from  Monday’s Insider were a mixed bag this week as volatility swept through the markets yet again. Our technical analysis of KXI helped us to avoid from jumping into a losing trade, while our recommendation to short IYT was also correct, although a bit mistimed. 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 IYT: Down 1.6%

This recommendation was spot-on directionally as IYT gapped lower on Tuesday as anticipated. This ETF, however, quickly regained its lost ground the next day, but proceeded to plunge lower on Friday alongside domestic equity indexes. We’re maintaining our “short” recommendation for IYT, although investors may find themselves frustrated over the next two weeks since volatility will likely remain high, resulting in choppy trading.

Trade #2 Long KXI: No Trade

This ETF managed to slip below our outlined support right from the start of trading on Tuesday, voiding our “long” recommendation. We kept our eye on KXI during the week, and unfortunately the fund was unable to settle above the $64 level as we would have liked. KXI is still attractive from a long-term perspective, but we would like to see this ETF close above its 200-day moving average for three or more consecutive days before jumping in.

Trade #3 Long GXF: Down 2%

This trade went well for the first two days of the week, holding support above $16 a share and climbing higher towards the $17 mark. Unfortunately, worries over Europe sparked a nasty sell-off on Friday, sending GXF below our outlined support at $16 a share and stopping us out of this position. We’re keeping an eye on this ETF and we recommend going “long” again only if shares are able to establish definitive support above the $18 level.

ETFdb Portfolios

Retirement ETFdb Portfolios

This was another dismal week for our retirement portfolios as fixed income instruments took a hit alongside equities, and virtually every corner of the market fell victim to rampant volatility. Nonetheless, bonds still held their ground better than stocks, putting our Ready to Retire portfolio at the top of the list.

ETFdb Portfolio Weekly Return YTD Return
Ready To Retire -0.66% 1.98%
5 Years To Retirement -0.87% -2.29%
Moderate -1.34% -2.49%
10 Years To Retirement -1.56% -3.89%
30 Years To Retirement -1.82% -5.90%
Cheapskate -1.82% n/a
20 Years To Retirement -1.85% -5.89%
Aggressive -2.64% -8.20%

Themed Portfolio

Performance among our themed ETFdb Portfolios was also a bit disappointing this week. Our Simple (But Effective) Safe Haven portfolio took a nose dive lower during this shortened trading week, although it remains by far the strongest portfolio from a year-to-date perspective. Our ultra-defensive Sky Is Falling portfolio was the only one to finish in green territory for the week, signaling that investors are without a doubt reluctant to jump back into the markets.

ETFdb Portfolio Weekly Return YTD Return
Sky Is Falling 0.22% 6.97%
Actively Managed -0.89% -4.16%
Black Swan Hyperinflation -1.24% 4.81%
Alpha-Seeker 2.0 -1.25% -3.92%
Ex-Europe -1.29% -3.48%
High Tax Bracket -1.43% -3.40%
Small Cap -1.72% n/a
High Yield -1.87% -1.40%
Equal Weight -1.90% n/a
Simple (But Effective) Safe Haven -2.30% 7.29%
Emerging & Frontier Markets -2.70% -7.78%
Asia Centric -3.02% -8.61%
RAFI -3.27% -14.68%
Ex-U.S -3.84% -8.69%

New ETF Highlights

September is off to a roaring start as more than a handful of ETFs have hit the street during this shortened week of trading. UBS rolled out a suite of volatility products while QuantShares launched several “market neutral” funds, all relevant offerings given the persistent volatility that has been plaguing Wall Street for the past month. Check out our ETF Launch Center for complete updates on all new ETFs.

ETF Launches

U.S. Market Neutral Funds

  • Launch: September 7th
  • ETFdb Category: Long-Short
  • Structure: ETF
  • Expense Ratio: 0.81%

QuantShares, a newcomer to the ETF industry, rolled out several “market neutral” funds, each one seeking to replicate an index of both long and short positions. 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 Momentum Fund (MOM)
  • U.S. Market Neutral Anti-Momentum Fund (NOMO)
  • U.S. Market Neutral Size Fund (SIZ)
  • U.S. Market Neutral Quality Fund (QLT)

Long VIX Futures 

  • Launch: September 8th
  • ETFdb Category: Volatility
  • Structure: ETN
  • Expense Ratio: 0.85%

UBS made a big push into a growing corner of the ETP market, launching 12 new ETNs that offer targeted exposure to VIX futures. The “long” offerings are linked to a total return index that is comprised of VIX futures with a weighted average maturity between one to six months, as well as a T-Bill component. The indexes are daily rolling indexes, with rolls occurring on a daily basis in order to keep the weighted average maturity of the underlying contracts constant.

  • ETRACS 1-Month S&P 500 VIX Futures ETN (VXAA)
  • ETRACS 2-Month S&P 500 VIX Futures ETN (VXBB)
  • ETRACS 3-Month S&P 500 VIX Futures ETN (VXCC)
  • ETRACS 4-Month S&P 500 VIX Futures ETN (VXDD)
  • ETRACS 5-Month S&P 500 VIX Futures ETN (VXEE)
  • ETRACS 6-Month S&P 500 VIX Futures ETN (VXFF)

Short VIX Futures 

  • Launch: September 8th
  • ETFdb Category: Volatility
  • Structure: ETN
  • Expense Ratio: 1.35%

UBS also launched six ETNs offering inverse exposure to indexes comprised of VIX futures contracts. Each of the daily short volatility ETNs will charge an annual fee of 1.35%, in line with fees charged by existing VelocityShares ETNs. The new funds include:

  • ETRACS Daily Short 1-Month S&P 500 VIX Futures ETN (AAVX)
  • ETRACS Daily Short 2-Month S&P 500 VIX Futures ETN (BBVX)
  • ETRACS Daily Short 3-Month S&P 500 VIX Futures ETN (CCVX)
  • ETRACS Daily Short 4-Month S&P 500 VIX Futures ETN (DDVX)
  • ETRACS Daily Short 5-Month S&P 500 VIX Futures ETN (EEVX)
  • ETRACS Daily Short 6-Month S&P 500 VIX Futures ETN (FFVX)

[For more information on ETF Insider, see our Pro Page]

Disclosure: No positions at time of writing.