It’s all about China these days and it probably will be leading up to the 2008 Olympics, who knows what it will be after that? Anyway, the Powershares Golden Dragon ETF (PGJ) is not a chain of restaurants, rather its an ETF that’s making a new 52 week high. Will she continue to break out and soar higher like a mighty dragon? Only time will tell! :)
I’ve been eyeing the the Financial Select Sector SPDR (XLF) during this credit crisis meltdown. So far the 50 WMA remains over the 200 WMA, which is Bullish, but its breaking down. The question is, will it test the 200 WMA and hold?
Everything seems to depend on the Fed and whether or not they decide to cut the interest rates. I’m debating buying some XLF for our retirement portfolios in a few days, check out the top 10 holdings it has:
| Company | Symbol | % Assets |
| AMER EXPRESS INC | AXP | 2.59 |
| AMER INTL GROUP INC | AIG | 6.47 |
| BK OF AMERICA CP | BAC | 7.75 |
| CITIGROUP INC | C | 9.06 |
| GOLDMAN SACHS GRP | GS | 3.15 |
| JP MORGAN CHASE CO | JPM | 5.9 |
| ML CO CMN STK | MER | 2.59 |
| MORGAN STANLEY | MS | 3.15 |
| WACHOVIA CP | WB | 3.49 |
| WELLS FARGO & CO NEW | WFC | 4.18 |
Wallstrip featured the iShares MSCI Malaysia Index (EWM) ETF yesterday and the most amusing part of the show were the street interviews. I’m not surprised that most people that Lindsay met have no idea where Malaysia is on the globe. No matter where Malaysia is, its weekly chart was something a lot of traders found two weeks ago.
EWM looks like it broke its trendline two weeks ago and is struggling to cross over again. Maybe it’ll do it this week?
I decided to feature the iShares MSCI Emerging Markets Index (EEM) ETF since Maoxian featured the Vanguard Emerging Markets (VWO) ETF. The emerging markets have been on fire and I suspect they’ll remain this way until they stop. I do find one bit of difference between the two ETF’s, EEM has an expense ratio of 0.75% vs 0.3% for VWO.
The melt up in indices continues and I suspect the short sellers will be squeezed throughout earnings seasons. Now’s a good time to be long but sooner or later the party will end. One day, when we least expect it, volatility will pick up and the first spike will probably be down. My guess is that it’ll probably have something to do with the sub-prime mess.
Take a look at the low volatility we’ve had for 4 years in the Nasdaq QQQQ’s. Heavy volatility clusters happened between 1999 and 2002 on both the positive and negative side. Then from 2002 through yesterday, we’ve had a period of relatively low volatility with an occasional spike.
First things first, I’m completely new to the world of options and I welcome constructive comments on any future posts regarding this topic. Having said that, I have a confession to make.
I’ve been working with an independent Wall Street option trader for the past few months building a volatility model for option trading. I can’t go into details regarding this activity, as it’s proprietary, but I can detail my journey into paper trading options.
Currently, we’re both paper trading the predictions of weekly directional volatility for PowerShares QQQ Trust (QQQQ) and the S&P 500 INDEX (.INX). What the model tries to predict is the direction of next week’s volatility and execute option strategies to capture those moves.
I’ll be posting a snapshot of my current paper portfolio and P/L once a week as a way to keep track of how well the model is doing.
I decided to take a closer look at iShares MSCI Japan Index (EWJ) ETF today because of the “carry trade” issue. Investors of the past three years made a good return investing in EWJ. That’s probably due to the carry trade firing up the Japanese export machine. This is good news for the Japanese people as they start to claw their way back from a decade long recession.
My long term outlook for the EWJ is a bit negative though, even if the odds are in our favor from the Monte Carlo Simulation. The Yen will likely appreciate over time as the BOJ raises rates. This will ultimately slow down the export machine and cause EWJ to take a hit. When this will happen is anyone’s guess but based on my experience we’ll know when the carry trade unwinds in a hurry!
What would Soros do? He’d probably be short the USDJPY pair right now, I know I would if I had the capital to stick it out.
The housing market is still floundering and I think it could get worse before it gets better. Market bottoms are typically made when every throws in the towel and I don’t think that’s happened yet.
The SPDR S&P Homebuilders (XHB) ETF looks like it wants to test its previous lows around $29 and who knows if that level will hold. If it doesn’t hold, then we know the housing recovery will take a lot longer than all the Realtors hope.
Someone we know has been waiting for XHB to trigger their limit order at $29, and as I posted before, they might just get it.
[tags]XHB, ETF, HomeBuilders, Housing, Bubble, Trend[/tags]
It’s easy to see that the latest rage is all about Private Equity. I seem to remember that last year’s rage was Hedge Funds. I wonder what it will be next year?
Any thoughts to why the sudden spike in ETF and Hedge Fund posts mid June?
[tags]HedgeFunds, PrivateEquity, Investing, 401k[/tags]
The Nasdaq 100 Trust shares (QQQQ) has been doing pretty well since July of last year but the question is, will this trend continue? That’s an interesting question because I really don’t know. From the candlestick chart it looks like it might if it can clear the $47.92 level.
Either way, the QQQQ’s is a very volatile ETF as seen on my daily volatility chart. I drew in the one, two, and three standard deviations for it and the last 3 STDEV move was this past February (2/27/2007). If I applied my S&P500 timing rules to the QQQQ’s then then 2/27/2007 was a prime 
buying day.
Still though, the QQQQ’s usually see 2 STDEV volatility moves more often than not. If I were a daytrader, I’d be trading this market!
[tags]QQQQ, Volatility, Options, Nasdaq, Trading, Investing[/tags]
If you look at the monthly chart of the iShares MSCI Brazil Index (EWZ), you’ll see a strong trend up starting around late 2002. A lot of other foreign ETF’s, funds, and stocks seemed to have started their trends UP around that time. When did the US start saber rattling about Iraq? Coincidence?
[tags]Brazil, EWZ, ETF, Foreign, International, Iraq[/tags]
