The Start Of A Correction?

by on April 7, 2012 | ETFs Mentioned:

Profit taking pressures swept over Wall Street this past week as the bulls retreated following the latest FOMC meeting. Investors started to scale back on their risk exposure early in the week after the Fed made no hints of an upcoming round of stimulus; with no mention of QE3, investors gave into broad-based selling pressures, demonstrating their concerns that the economic recovery is still far too fragile to sustain itself organically. Given the stellar bull-run so far this year, it shouldn’t come as much of a surprise to see markets turn lower next week again, seeing as how many have been anticipating for a healthy correction to take place. 

Actionable ETF Trade Ideas

Last Week’s Actionable ETF Ideas
Ticker Position Performance







Our picks from Monday’s Insider posted a mixed performance as a winning short trade wasn’t enough to cover the losses from our two long recommendations. 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 40 all-ETF model portfolios].

Trade #1 Long KOL: Down 0.7%

This ETF spiked higher right after the opening bell on Monday morning, setting the scene for a bullish week as we had anticipated. Selling pressures accelerated after the FOMC meeting on Tuesday and KOL fell down to $32 a share, effectively erasing all of the gains from the previous session. Uncertainty levels on Wall Street were elevated the following days and KOL was unable to accumulate bullish momentum; this long trade ended up with a 0.7% loss on the week. 

Trade #2 Short XHB: Up 1.1%

XHB opened below the previous week’s closing price on Monday morning, putting our short position in green territory right from the start. Surprisingly, XHB held its ground quite well on Tuesday, failing to give into profit taking pressures which dragged down virtually every asset class on Wall Street. Nonetheless, our bearish suspicions proved correct as XHB continued to trade lower in the following days, leaving us with a respectable 1.1% gain on the week.

Trade #3 Long XLE: Down 1.5%

Our prediction for an energy sector rebound proved incorrect this week as weakness in commodities coupled with an equity market correction created major headwinds for this long recommendation. XLE climbed higher on Monday, settling right near $72.50 a share. Selling pressures on Tuesday and Wednesday however were enough to drag down this ETF near the $70 level, erasing all of the gains from the start of the week. This recommendation kept afloat above our outlined stop-loss level, although it still ended up in red territory, leaving us with a 1.5% loss on the week. 

ETFdb Portfolios

Retirement ETFdb Portfolios

The stock market downturn this past week took its toll on our retirement portfolios, with our Aggressive one leading the way lower thanks to its equity-heavy composition. Our Low Volatility portfolio was able to end the week in green territory thanks to its conservative security-selection approach [see All Portfolio Returns].

ETFdb Portfolio Weekly Return
Low Volatility 0.19%
Ready To Retire -0.42%
5 Years Til Retirement -0.48%
20 Years Til Retirement -0.52%
10 Years Til Retirement -0.54%
30 Years Til Retirement -0.60%
Cheapskate -0.63%
Moderate -0.67%
Aggressive -0.72%

Regional ETFdb Portfolios

With selling pressures sweeping over Wall Street, it’s not too surprising to see our foreign equity portfolios taking a dip as well. Our Africa-Centric portfolio shed nearly two percentage points on the week, while even our more defensive Global Titans portfolio ended up in red territory as well. Our Asia-Centric portfolio proved to be most resilient, managing to clinch minor gains during an otherwise choppy week for financial markets. 

ETFdb Portfolio Weekly Return
Asia-Centric 0.37%
Emerging & Frontier Markets 0.36%
BRIC-or-Bust -0.07%
Easy-As-ABC -0.43%
LatAm-Centric -0.52%
Ex-U.S. -0.71%
Ex-Europe -0.79%
Global Titans -1.43%
Euro Free Europe -1.67%
Africa-Centric -1.98%

Themed ETFdb Portfolios

Our themed portfolio took a dive alongside broad-based equity indexes this week as profit taking pressures on Wall Street spread like wildfire. Gold prices plunged as inflation worries cooled off after the Fed made no hints of additional quantitative easing; likewise, our GLD-Free Portfolio was the worst performing one for the week. Our Commodity-Guru portfolio was the only one to end the week in green territory, showcasing the potential of this asset class to serve as a diversifying agent. 

ETFdb Portfolio Weekly Return
Commodity Guru 0.05%
The Sky Is Falling -0.03%
Cheapskate Hedge Fund -0.06%
King Dollar -0.07%
Actively-Managed -0.21%
Alpha Seeker 2.0 -0.21%
Baby Boomers -0.23%
Pure Growth -0.24%
AlphaDEX -0.26%
Kitchen Sink -0.32%
Better-Than-AGG Total Bond Market -0.41%
2012 ETFdb Portfolio -0.45%
Socially Responsible -0.60%
Energy Bull -0.71%
High Tax Bracket -0.74%
High Tech -0.79%
Ben Graham 50/50 -0.80%
Small Cap -0.82%
Simple (But Effective) Safe Haven -0.90%
Black Swan Hyperinflation -0.92%
Equal Weight -0.95%
High Yield -0.98%
Greedy When Others Are Fearful -1.01%
Financials Free -1.19%
Futures Free Commodity -1.23%
RAFI -1.86%
GLD-Free Gold Bug  -3.60%

Disclosure: No positions at time of writing.