Top Performing ETFs

This past week has been a very tough week to form an opinion.

The volume every single day was above average.

The market breadth numbers have reached extreme levels. I am seeing numbers on some of my ratios, that I have never seen before.

I got stopped out of my short position in <b>DRV</b> for a NOT so small loss. I have been wrong about <b>DRV</b> the very day I got in, I should have stuck to my principle of exiting as soon as the trade went against my expectation. This will be a good lesson to remember.

Though I am very tempted to get long here, I have decided to stay out.

Portfolio now:
<b>100%: Cash</>

.
 
Quote from investics:


Why search for great stocks when I can buy ultra ETF’s? by Wishing Wealth

I spend so much time trying to find the right growth stock that will outperform the market. Now that we have the extreme ultra (3x) ETF’s it may be preferable to trade them. An ultra ETF is a basket of leveraged stocks or futures that attempts to outperform the relevant index. Since I like to trade tech stocks, I focus on the NASDAQ 100 index, which escaped some of the carnage last year because it contains no financial stocks.

I could simply buy the QQQQ ETF when I think the market is in an up-trend. In this way, I do not have to pick individual stocks but am invested in the 100 stocks in the NASDAQ 100 index. Lately, stocks tend to explode or implode when earnings are announced. Because the QQQQ represents 100 stocks, there is less impact from individual earnings announcements. If I want to place a leveraged bet on the QQQQ I can even trade options on that ETF.

Enter the Ultra QQQQ ETF, QLD which attempts to double (2X) the bullish performance of the QQQQ. While there is no 3X ETF for the QQQQ, there is a bullish tech 3X tech ETF, TYH. (There are also analogous bearish ETF’s for those betting on a decline in these stocks, which I will not discuss today.) Keep in mind that since these ultra ETF’s are leveraged securities, they can move more quickly in both directions–up or down.

So, if I am betting on an up-trend I could buy any one of these ETF’s to make money as tech stocks go up. The table below compares how one would have done by buying each of these ETF’s during the rally that began after 7/14 through 8/21.

I was somewhat astonished by the findings. During this period, the QQQQ increased about 13%. The Ultra 2x ETF, QLD, advanced 27% and the 3x tech ETF, TYH, advanced 42%. I expected these types of results if the ultra ETF’s were performing as intended. QQQQ COMPARISONBut what surprised me was how poorly I might have done if I had tried to do better by buying individual NASDAQ 100 component stocks. About 57% of the NASDAQ 100 stocks rose more than the 13% that the QQQQ ETF did. So I would have had a better than even chance that the stock I bought would do better than the standard ETF. However, only 19% of the NASDAQ 100 stocks beat the 2X ETF, QLD, and only 5% beat the 3X ultra tech ETF, TYH. The odds of one of my stocks beating the ultra ETF’s were quite low! IF I can be right on the trend, and the GMI guides me here, it seems that I can have much better odds of a good gain by buying the ultra ETF’s–and with less impact from earnings surprises. Now, I know that you are thinking that we all could do better by not limiting ourselves to the NASDAQ 100 stocks, but I suspect the odds of success from buying individual stocks would still be lower than buying the ultra ETFs……
More...

Getting access to 3x leverage ETFs are one of the strongest reasons for me to trade the US markets instead of my home market. Seeing UPRO, and URTY gaining respectively 65% and 87% since the last adjustment in February is just amazing. I got lazy and focused more on my day job so I didn`t get to ride it, but it`s not that hard to spot the index movement compared to individual stocks. I just bought UPRO some days ago just to be in the game again, and it has gone up about 4,5% in just 3 days while a new correction might be due soon. Planning on having my base capital in one of the Index ETFs when I start trading more regularly.
 
<b>Haakon</b>

Thank you for your post and thanks for expressing your thoughts.

If you feel comfortable could you tell us which country you are from?

Be very careful with leverage ETFs as they come down equally fast as well.


Quote from Haakon:

Getting access to 3x leverage ETFs are one of the strongest reasons for me to trade the US markets instead of my home market. Seeing UPRO, and URTY gaining respectively 65% and 87% since the last adjustment in February is just amazing. I got lazy and focused more on my day job so I didn`t get to ride it, but it`s not that hard to spot the index movement compared to individual stocks. I just bought UPRO some days ago just to be in the game again, and it has gone up about 4,5% in just 3 days while a new correction might be due soon. Planning on having my base capital in one of the Index ETFs when I start trading more regularly.
More...
 
<b>Market View - 26.Apr.2010</b>

<b>NYSE Percent of stocks above the 50 Day MA: 87%</b>

Buy Aggressively
Buy Cautiously
<b>Hold</b>
Sell Cautiously
Sell Aggressively

(the highlighted option is my current sentiment)

Portfolio: <b>100% Cash</b>
 
Getting access to 3x leverage ETFs are one of the strongest reasons for me to trade the US markets instead of my home market. Seeing UPRO, and URTY gaining respectively 65% and 87% since the last adjustment in February is just amazing. I got lazy and focused more on my day job so I didn`t get to ride it, but it`s not that hard to spot the index movement compared to individual stocks. I just bought UPRO some days ago just to be in the game again, and it has gone up about 4,5% in just 3 days while a new correction might be due soon. Planning on having my base capital in one of the Index ETFs when I start trading more regularly. [/QUOTE]



Somewhere from Scandinavia - Norway I guess. :-)

Fascinating way and fairly easy way of trading.
Where do I find all those double and triples EFTs please.
Are there EFTs to short the market?

Thanks for your help.

Ch.
 
Quote from investics:

<b>Haakon</b>

Thank you for your post and thanks for expressing your thoughts.

If you feel comfortable could you tell us which country you are from?

Be very careful with leverage ETFs as they come down equally fast as well.
More...

Hello investics, I`m from Norway.

Yeah, they probably plunge up to 10% on the beginning of a real correction, so I`ll probably take a small loss or about break even on this position. I just want to be comitted somewhere for now, and maybe switch to bear on the next correction, but at least be sharp when the next upmove begins.
 
Quote from Goalgetter:

Getting access to 3x leverage ETFs are one of the strongest reasons for me to trade the US markets instead of my home market. Seeing UPRO, and URTY gaining respectively 65% and 87% since the last adjustment in February is just amazing. I got lazy and focused more on my day job so I didn`t get to ride it, but it`s not that hard to spot the index movement compared to individual stocks. I just bought UPRO some days ago just to be in the game again, and it has gone up about 4,5% in just 3 days while a new correction might be due soon. Planning on having my base capital in one of the Index ETFs when I start trading more regularly.
More...




Somewhere from Scandinavia - Norway I guess. :-)

Fascinating way and fairly easy way of trading.
Where do I find all those double and triples EFTs please.
Are there EFTs to short the market?

Thanks for your help.

Ch. [/QUOTE]

Haha, good guess :) Maybe you know the name HÃ¥kon?

Thanks, you`ll nearly allways find equivalents in short. I seem to only spot the ProShares ones when I try to find something interesting, but I also know of iShares.
 
Quote from Haakon:

Somewhere from Scandinavia - Norway I guess. :-)

Fascinating way and fairly easy way of trading.
Where do I find all those double and triples EFTs please.
Are there EFTs to short the market?

Thanks for your help.

Ch.
More...

Haha, good guess :) Maybe you know the name HÃ¥kon?

Thanks, you`ll nearly allways find equivalents in short. I seem to only spot the ProShares ones when I try to find something interesting, but I also know of iShares. [/B][/QUOTE]


Yes Sir - I know your king's (or his son) first name therefore the guess was not too difficult.

Thanks for the information.
I had a quick look at Proshares and I nearly dropped dead due to
the amount of EFTs.
How do you make your selection and what are the decisive factors there in choosing one ot the other.

What do they mean by "Daily Objective" - "100% of the inverse" ??
"Groups" are called "short" or "Ultra" (not to mention "alpha".)
Very funny. However, there are no 300% funds as far as I could see.
iShares choice of funds does not show any EFTs as far as I have seen so far. Further help would be appreciated.
Timing the markets direction allone is not that difficult - the Nasdaq 100 is long since March 1st and the same applies to the QQQQ.
May be there is more in "Wishing Wealth" that I have not read yet.

Regards,
 
Quote from Goalgetter:
Yes Sir - I know your king's (or his son) first name therefore the guess was not too difficult.

Thanks for the information.
I had a quick look at Proshares and I nearly dropped dead due to
the amount of EFTs.
How do you make your selection and what are the decisive factors there in choosing one ot the other.

What do they mean by "Daily Objective" - "100% of the inverse" ??
"Groups" are called "short" or "Ultra" (not to mention "alpha".)
Very funny. However, there are no 300% funds as far as I could see.
iShares choice of funds does not show any EFTs as far as I have seen so far. Further help would be appreciated.
Timing the markets direction allone is not that difficult - the Nasdaq 100 is long since March 1st and the same applies to the QQQQ.
May be there is more in "Wishing Wealth" that I have not read yet.

Regards,
More...

You`re welcome, for now I only know about the big indexes so I choose the one that are most geared (ie. 3x) for the index that I think will move most in the near future. In this recovery the small firms will be doing the heavy lifting so the Russel moves the most, but sadly my broker don`t offer URTY (Russel) at this moment, so I focus on UPRO (S&P). Basically just visit the proshares site again and choose 3x (300%) or -3x (300% of inverse), and pick what you feel is best. When doing your analysis you need to analyse the equivalent index and not the ETF IMO. This is because the ETF move more in a logarithmic trend so it`s difficult to draw the trend lines.

Note that I`m also new to this (and trading in general), but I plan on studying sector ETFs when I get the time (but those are max 2x anyway, so no hurry)

Word of caution, study the drop in the ETF you plan to go into when the mirrored index has a correction so you don`t get suprised when this happens.
 
choose 3x (300%) or -3x (300% of inverse), and pick what you feel is best. When doing your analysis you need to analyse the equivalent index and not the ETF IMO. This is because the ETF move more in a logarithmic trend so it`s difficult to draw the trend lines.

Note that I`m also new to this (and trading in general), but I plan on studying sector ETFs when I get the time (but those are max 2x anyway, so no hurry)

Word of caution, study the drop in the ETF you plan to go into when the mirrored index has a correction so you don`t get suprised when this happens. [/B][/QUOTE]


My 12 points go to Norway.

Thanks.
Anyway, I still don't get the point with regard to " -3x " -
Trading the short side?

Thanks for taking your time.

INVESTICS would be welcome as well -:)
 
You must log in or register to reply here.
Back
Top