Guest Article
Thursday Sept 2nd, 2010
Wednesday was a big session with better than expected manufacturing surging the market 3%. In this article I will do a quick technical take on the current situation for the SP500 and gold as they are both trading at a key resistance level. also its important to know what type of price action we will get in the next 1-2 days so you can have your profit targets or protective stops in place depending on which side of the market you are currently playing.
SPY – S&P 500 Exchange Traded Fund – 60 Minute Chart
The market is currently in a down trend which means bounces get sold. But if you take a look at the buying volume ratio at the bottom of the chart you will notice that in an uptrend buying surges are the beginning of a rally, and during a downtrend buying surges are the end of a rally. I also want to mention that a lot of volume traded at this current level which you can see on the volume by price bars on the chart. This means there will be a lot of sellers to overcome before breaking to the upside.
The situation the market is at now makes things difficult to tell if this bounce will get sold, or if its just the starting of a rally. There are several arguments for each side but the one which I think has the most influence is ...
To see the rest of the article, click HERE
By Chris Vermeulen
Thursday, September 02, 2010
Read This Before You Trade Your Next ETF
Guest Article
Whether it’s soaring or slumping — and it often does both during the course of a week — the financial sector never falls far from investors’ radar.
That’s not news, of course. But what you might not know is that there are many ways to trade this sector, none of which involves buying or selling a single stock but, rather, making a single play on the industry as a whole.
How can you make one trade that gives you exposure (whether long or short) to banks, brokerages, insurance companies and other types of asset-management outfits? By adding Exchange-Traded Funds (ETFs) and ETF options to your investment arsenal, you only pay one commission (because you’re only buying/selling one position) to be exposed to the upside (or downside) of its various component stocks.
Know Your ETF Holdings
ETFs (and their options) have exploded in popularity in recent years. They offer securities that trade like stocks but are micro-focused in almost every sector in the markets (including international, commodity, short, ultra-short, etc.).
But there can be a great difference in the holdings, diversification and trade strategy of ETFs, even within one particular sector.
Let’s take a closer look at some of the various financial-sector ETFs “out there” so that you can see some of the many choices you have when you’re ready to add sector plays to your portfolio.
Among the group of financial ETFs are:
* iShares S&P Global Financials (IXG)
* iShares Dow Jones U.S. Financial (IYF)
* iShares Dow Jones U.S. Financial Services (IYG)
* Financial Select Sector SPDR (XLF)
* Vanguard Financials (VFH)
* Rydex S&P Equal Weight Financials (RYF)
* PowerShares FTSE Rafi Financials (PRFF)
* First Trust Financials AlphaDEX (FXO)
* PowerShares Dynamic Financials (PFI)
This list does not even include international, bank, insurance, preferred and other types of financial-related ETFs like the short and ultra-short ones that aim to give you even-greater leverage on smaller moves.
With so many choices, which one represents the smartest way to play the sector at any given time?
Weigh(t)ing Your Options
Not all ETFs are created equal, and that’s a good thing. The more choices we have, the more control we have over the performance of our portfolio.
Remember, the biggest benefit of trading ETFs and/or their options is that, instead of spreading your capital among several individual trades, you can bet on (or against) an industry with just one investment. That said, your responsibility is to learn exactly which underlying stocks make up each individual ETF.
And, to take it one step further, you should know just how the stocks are “weighted” within each ETF. That is, if 10 stocks are included one ETF, you probably won’t see each of them “weighing” an equal 10% of the overall ETF but, rather, some stocks will represent a bigger percentage than others.
Let’s examine the diversification and top holdings of the above-mentioned ETFs. (All data from Yahoo! Finance.)
IXG — Top 10 Holdings are 24.44% of assets.
Top 3 Holdings:
JPMorgan Chase (JPM) — 3.66%
HSBC Holdings (HBC) — 4.05%
Wells Fargo (WFC) — 3.36%
IYF — Top 10 Holdings are 37.91% of assets.
Top 3 Holdings:
JPM — 7.9%
BAC — 7.76%
WFC — 6.92%
IYG — Top 10 Holdings are 57.68% of assets.
Top 3 Holdings:
JPM — 12.38%
BAC — 12.15%
WFC — 10.67%
XLF — Top 10 Holdings are 51.15% of assets.
Top 3 Holdings:
JPM — 9.87%
BAC — 9.47
WFC — 8.76%
VFH — Top 10 Holdings are 36.86% of assets.
Top 3 Holdings:
JPM — 8.2%
WFC — 7.26%
BAC — 5.02%
RYF — Top 10 Holdings are 17.01% of assets.
Top 3 Holdings:
SLM Corp. (SLM) — 2.15%
Morgan Stanley (MS) — 1.92%
Federated Investors (FII) — 1.78%
PRFF — Top 10 Holdings are 48.19% of assets.
Top 3 Holdings:
JPM — 11.15%
WFC — 8.59%
Berkshire Hathaway (BRK/B) — 6.34%
FXO — Top 10 Holdings are 14.51% of assets.
Top 3 Holdings:
W.R. Berkley (WRB) — 1.85%
Allied World Assurance Holdings (AWH) — 1.6%
PartnerRe Ltd. (PRE) — 1.47%
PFI — Top 10 Holdings are 25.73% of assets.
Top 3 Holdings:
Ameriprise Financial (AMP) — 3.12%
MetLife (MET) — 2.85%
Unum Group (UNM) — 2.71%
Now, all ETFs have different rules regarding re-balancing of holdings, discretion of holdings, focus, etc. — and some are more-liquid than others, both in stock and option volume.
Recent massive market capitalization changes in individual stocks have certainly made an impact of the relative weightings of holdings in this sector, as well.
But certainly, the active investor would be wise to know what they are buying when they invest or trade in one of these ETFs or the options on them. For example, the likes of IYG, XLF, and PRFF have around 50% of their holdings in their top 10 assets — meaning, they are not very diversified.
In addition, on IYG for example, around 25% of the holdings are in JPM and WFC alone (based on the data utilized above). So, the performance of that ETF will be greatly affected by just two securities.
In one way, you could say that is much more risky. But from another perspective, you could view this as getting more “bang for the buck.”
Then there are the very diversified ETFs, some of which attempt to equal-weight — such as RYF and FXO, where the top holdings comprise about 15% of assets and the top holdings are around 2% of assets. In the current market environment, we have seen many sectors move “en masse” quite a bit — more than what is normally the case. So, these ETFs may also move as a group.
Also remember that supply and demand is a big factor in ETF performance, because they trade as stocks, not on the actual value of their assets. But as the market settles down into more of a “stock-picking” environment — and if arbitrage-type discrepancies are seen in various ETFs vs. individual stocks, etc (as has been seen recently in preferred vs. common, closed-end funds, etc.) — then you may begin to see more price performance disparity in ETFs based on their holdings and diversification.
The bottom line is that, when you’re gearing up to invest in or trade an ETF or options on an ETF, you should examine the holdings, structure and goals of the ETF to see which one most matches the expectations (short or long term) you have for that sector.
Trade Well,
Andrew Hart
Whether it’s soaring or slumping — and it often does both during the course of a week — the financial sector never falls far from investors’ radar.
That’s not news, of course. But what you might not know is that there are many ways to trade this sector, none of which involves buying or selling a single stock but, rather, making a single play on the industry as a whole.
How can you make one trade that gives you exposure (whether long or short) to banks, brokerages, insurance companies and other types of asset-management outfits? By adding Exchange-Traded Funds (ETFs) and ETF options to your investment arsenal, you only pay one commission (because you’re only buying/selling one position) to be exposed to the upside (or downside) of its various component stocks.
Know Your ETF Holdings
ETFs (and their options) have exploded in popularity in recent years. They offer securities that trade like stocks but are micro-focused in almost every sector in the markets (including international, commodity, short, ultra-short, etc.).
But there can be a great difference in the holdings, diversification and trade strategy of ETFs, even within one particular sector.
Let’s take a closer look at some of the various financial-sector ETFs “out there” so that you can see some of the many choices you have when you’re ready to add sector plays to your portfolio.
Among the group of financial ETFs are:
* iShares S&P Global Financials (IXG)
* iShares Dow Jones U.S. Financial (IYF)
* iShares Dow Jones U.S. Financial Services (IYG)
* Financial Select Sector SPDR (XLF)
* Vanguard Financials (VFH)
* Rydex S&P Equal Weight Financials (RYF)
* PowerShares FTSE Rafi Financials (PRFF)
* First Trust Financials AlphaDEX (FXO)
* PowerShares Dynamic Financials (PFI)
This list does not even include international, bank, insurance, preferred and other types of financial-related ETFs like the short and ultra-short ones that aim to give you even-greater leverage on smaller moves.
With so many choices, which one represents the smartest way to play the sector at any given time?
Weigh(t)ing Your Options
Not all ETFs are created equal, and that’s a good thing. The more choices we have, the more control we have over the performance of our portfolio.
Remember, the biggest benefit of trading ETFs and/or their options is that, instead of spreading your capital among several individual trades, you can bet on (or against) an industry with just one investment. That said, your responsibility is to learn exactly which underlying stocks make up each individual ETF.
And, to take it one step further, you should know just how the stocks are “weighted” within each ETF. That is, if 10 stocks are included one ETF, you probably won’t see each of them “weighing” an equal 10% of the overall ETF but, rather, some stocks will represent a bigger percentage than others.
Let’s examine the diversification and top holdings of the above-mentioned ETFs. (All data from Yahoo! Finance.)
IXG — Top 10 Holdings are 24.44% of assets.
Top 3 Holdings:
JPMorgan Chase (JPM) — 3.66%
HSBC Holdings (HBC) — 4.05%
Wells Fargo (WFC) — 3.36%
IYF — Top 10 Holdings are 37.91% of assets.
Top 3 Holdings:
JPM — 7.9%
BAC — 7.76%
WFC — 6.92%
IYG — Top 10 Holdings are 57.68% of assets.
Top 3 Holdings:
JPM — 12.38%
BAC — 12.15%
WFC — 10.67%
XLF — Top 10 Holdings are 51.15% of assets.
Top 3 Holdings:
JPM — 9.87%
BAC — 9.47
WFC — 8.76%
VFH — Top 10 Holdings are 36.86% of assets.
Top 3 Holdings:
JPM — 8.2%
WFC — 7.26%
BAC — 5.02%
RYF — Top 10 Holdings are 17.01% of assets.
Top 3 Holdings:
SLM Corp. (SLM) — 2.15%
Morgan Stanley (MS) — 1.92%
Federated Investors (FII) — 1.78%
PRFF — Top 10 Holdings are 48.19% of assets.
Top 3 Holdings:
JPM — 11.15%
WFC — 8.59%
Berkshire Hathaway (BRK/B) — 6.34%
FXO — Top 10 Holdings are 14.51% of assets.
Top 3 Holdings:
W.R. Berkley (WRB) — 1.85%
Allied World Assurance Holdings (AWH) — 1.6%
PartnerRe Ltd. (PRE) — 1.47%
PFI — Top 10 Holdings are 25.73% of assets.
Top 3 Holdings:
Ameriprise Financial (AMP) — 3.12%
MetLife (MET) — 2.85%
Unum Group (UNM) — 2.71%
Now, all ETFs have different rules regarding re-balancing of holdings, discretion of holdings, focus, etc. — and some are more-liquid than others, both in stock and option volume.
Recent massive market capitalization changes in individual stocks have certainly made an impact of the relative weightings of holdings in this sector, as well.
But certainly, the active investor would be wise to know what they are buying when they invest or trade in one of these ETFs or the options on them. For example, the likes of IYG, XLF, and PRFF have around 50% of their holdings in their top 10 assets — meaning, they are not very diversified.
In addition, on IYG for example, around 25% of the holdings are in JPM and WFC alone (based on the data utilized above). So, the performance of that ETF will be greatly affected by just two securities.
In one way, you could say that is much more risky. But from another perspective, you could view this as getting more “bang for the buck.”
Then there are the very diversified ETFs, some of which attempt to equal-weight — such as RYF and FXO, where the top holdings comprise about 15% of assets and the top holdings are around 2% of assets. In the current market environment, we have seen many sectors move “en masse” quite a bit — more than what is normally the case. So, these ETFs may also move as a group.
Also remember that supply and demand is a big factor in ETF performance, because they trade as stocks, not on the actual value of their assets. But as the market settles down into more of a “stock-picking” environment — and if arbitrage-type discrepancies are seen in various ETFs vs. individual stocks, etc (as has been seen recently in preferred vs. common, closed-end funds, etc.) — then you may begin to see more price performance disparity in ETFs based on their holdings and diversification.
The bottom line is that, when you’re gearing up to invest in or trade an ETF or options on an ETF, you should examine the holdings, structure and goals of the ETF to see which one most matches the expectations (short or long term) you have for that sector.
Trade Well,
Andrew Hart
Wednesday, September 01, 2010
STARmeter Ratings for Buffett, Soros, Cramer
IMDB.com, also known as Internet Movie Database, publishes STARmeter ratings of anyone who has ever had anything to do with show business. The STARmeter shows what people are interested in, based on the actual behavior of millions of IMDb users, showing if there is a high level of public awareness and/or interest in the person. Here is a list of several noted traders, investors, and other well-known individuals in the financial field, along with their STARrating change from last week.
George Soros +511%
Warren Buffett +24%
Jim Cramer +14%
Suze Orman +3%
Al Gore 0%
Robert Kiyosaki -1%
Bill Gates -2%
Maria Bartiromo -4%
Erin Burnett -36%
T. Boone Pickens -42%
Carl Icahn -94%
Stockerblog -8%
George Soros +511%
Warren Buffett +24%
Jim Cramer +14%
Suze Orman +3%
Al Gore 0%
Robert Kiyosaki -1%
Bill Gates -2%
Maria Bartiromo -4%
Erin Burnett -36%
T. Boone Pickens -42%
Carl Icahn -94%
Stockerblog -8%
How to Buy a Marin County Mansion for $150
Maybe you haven't made enough profits in the stock market to pay cash for a $2 million Marin County home with four bedrooms and 4 1/2 baths with pool and spa, plus a fantastic view. But there is another way; you might get lucky and get the home free and clear for just $150, through a raffle where the proceeds go towards a Marin based charitable organization.
The raffle is offered through Dream House Raffle.
The raffle is offered through Dream House Raffle.
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