ETF Insider: Bull Train Stops At Resistance

ETF Database

The low volume trading environment made it easy for the bulls to continue their winning streak despite a string of mixed economic data releases. Although U.S. retail sales trumped expectations, another sluggish GDP report from the eurozone kept the lid on investors’ confidence. The summer slowdown on Wall Street may have seen its laziest days, however, as next week will feature a number of important releases including Fed minutes and July durable goods orders [see also 3 Commodities To Best With Buffett].

Actionable ETF Trade Ideas Last Week’s Actionable ETF Ideas
Ticker Position Week Performance
XRT

Long

Up Arrow


+2.5%
OFF

Long

Down Arrow

-1.9%
FXE

Long

Down Arrow

-0.1%

Our picks from Monday’s Insider posted solid results as profits from our winning trade overshadowed our two losing 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 45 all-ETF model portfolios].

Trade #1 Long XRT: Up 2.5%
Our timing was spot-on with this recommendation. XRT held above $59 a share as anticipated and bullish momentum returned after retail sales beat analysts expectations on Tuesday, shedding some optimism on the health of the U.S. consumer. This ETF kept its head above the gap on Wednesday and went on to stage another run higher on Thursday. Buying pressures continued into Friday helping to push this ETF near its highs just shy of the $62 level.

Trade #2 Long OFF: Down 1.9%
This tactical, fundamentally-defensive recommendation turned sour as investors broadly embraced the “risk-on” trade this past week instead. OFF appeared to be due for a bounce higher, however, selling pressures across safe havens dragged this ETF lower from the start of the week. Optimism on Wall Street kicked us out of this trade as we stuck to our rules and cut our losses after OFF declined below our stop-loss at the $21 level on Thursday.

Trade #3 Long FXE:  Down 0.1%
This was a lackluster recommendation as up-down trading in the currency markets left us with a small loss on the week. Although the news out of Europe wasn’t all that bad as equity markets overseas pushed higher, investors had a hard time jumping back into the beat down currency. FXE dipped below $122 a share on Wednesday, which put our stop-loss in sight, although it managed to regain its footing the following days despite failing to generate a profit on the week.

ETFdb Portfolios

Retirement ETFdb Portfolios

Our plain vanilla retirement portfolios were mixed on the week, oscillating between minor gains and losses as bullish sentiment across equity markets created some headwinds for our bond-heavy strategies. The 30 and 20 Years Til Retirement portfolios are sitting on double-digit gains year-to-date, showcasing that the bulls have most certainly returned to the stock market: 

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Regional ETFdb Portfolios

Most of our regional portfolios surprisingly ended up in red territory despite the prevailing “risk-on” sentiment throughout the week. The Africa-Centric Portfolio clinched minor gains on the week and remains ahead of the pack from a year-to-date perspective as well, returning 12% thus far in 2012. 

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Themed ETFdb Portfolios

The Greedy When Others Are Fearful Portfolio and the Baby Boomers Portfolio took the lead on the week, gaining roughly one percentage point each as major equity indexes flirted with historical resistance levels. Demand for bonds slumped as equity markets welcomed back the bulls, dragging our Better-Than-AGG Total Bond Market Portfolio into red territory. 

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Disclosure: No positions at time of writing.

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