Fed Offers No Relief

by on August 4, 2012 | ETFs Mentioned:

Up-down trading remains the dominant theme on Wall Street as investores endured another choppy week driven by headlines. Stocks headed downhill in the first half of the week after investors expressed their disappointing with the Fed, which offered no new stimulus measures while at the same time citing a deteriorating economic outlook. The bears remained in control as the ECB also left investors hoping for more as Draghi failed to offer up a new initiative to ensure the unity and stability of the debt burdened currency bloc. Nonetheless, much of the losses on the week were erased Friday as markets rallied into bright green territory thanks to a better-than-expected U.S. employment report [see also Roubini Warns Low Commodity Price Signal Economic Disease].

Actionable ETF Trade Ideas

Last Week’s Actionable ETF Ideas
Ticker Position Week Performance
GDX

Long

-2.3%
UUP

Long

-0.7%
BTAL

Long

+0.6%

Our picks from Monday’s Insider posted mixed results as Friday’s massive rally erased all of the profits in our best recommendation. 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 45 all-ETF model portfolios].

Trade #1 Long GDX: Down 2.3%
This recommendation got off to an encouraging start as shares of GDX edged higher on Monday. Selling pressures in the gold futures market dragged GDX lower the following day, while the broad market sell-off on Wednesday proved to be dismal for this trade. We stuck to our rules and cut our losses as GDX declined below our outlined stop-loss at the $42 a share, leaving us with a loss on the week. GDX bounced back higher the following days, although it ultimately ended below Monday’s opening price.

Trade #2 Long UUP: Down 0.7%
This was by far our most frustrating recommendation on the week. UUP climbed higher Tuesday through Thursday, inching closer and closer to the $23 mark as demand for safe havens increased amidst the uncertain commentary from the FOMC and European Central Bank. However, Friday’s bullish U.S. employment report erased all our gains for the week as shares of UUP shed upwards of 1%, falling just pennies away from our outlined stop-loss at the $22.60 level.

Trade #3 Long BTAL: Up 0.6%
BTAL has proven itself as a viable tool for protecting investors against downside volatility without incurring the hassle and risks associated with taking an outright short position in the market. This tactical tool inched higher as lower-beta securities outperformed their riskier counterparts, leaving us with a minimal gain during an otherwise turbulent week on Wall Street.

ETFdb Portfolios

Retirement ETFdb Portfolios

Our retirement-themed portfolio ended the week in green territory as safe haven demand bolstered bond-heavy strategies higher. Our 30 Years Til Retirement Portfolio pulled ahead thanks to its more aggressive allocation to equities, which was favorably positioned to profit during Friday’s big rally.

Regional ETFdb Portfolios

The Latin America Centric Portfolio was the winner on the week, while our BRIC-Or-Bust strategy came in last place. The Africa-Centric Portfolio remains at the top of the list from a year-to-date performance perspective while the BRIC portfolio sits at the bottom of the barrel.

Themed ETFdb Portfolios

Among our themed strategies, the Pure Value Portfolio came out on top with a decisive lead, while selling pressures in the gold futures market dragged our GLD-Free Gold Bug Portfolio into last place. From a year-to-date performance perspective, our health care-centric Baby Boomers Portfolio remains in the lead with nearly double-digit gains.

Disclosure: No positions at time of writing.