Why actively trade ETFs?
- Thread starter deronwagner
- Start date
Hi doublea,
See my personal profile please.
Deron
See my personal profile please.
Deron
Here is a link to some of my ETF trade ideas for today. I would have posted the actual text here on the board, but there are too many associated charts, so it is easier to just post the URL. . .
I'm working on part 2 of the article I posted last week on getting efficient ETF order executions and I will post here when completed, probably this weekend.
I'm working on part 2 of the article I posted last week on getting efficient ETF order executions and I will post here when completed, probably this weekend.
Cool thread Deron, i haven't done much w/ ETF's yet but will be taking a closer look thx to some of the positives u highlight.
Also interesting, it appears that single stock future ETFS- or their rough equivalent- will be appearing soon. Curious to see if onechicago can break off a piece o' dat
http://www.onechicago.com/060000_press_news/press_news_2002/08142002.html
Also interesting, it appears that single stock future ETFS- or their rough equivalent- will be appearing soon. Curious to see if onechicago can break off a piece o' dat
http://www.onechicago.com/060000_press_news/press_news_2002/08142002.html
Yesterday's weakness put the Nasdaq below the critical support levels of the 20 and 40 day moving averages, as well as the lower channel of the uptrend on the daily chart that we spoke of. From a technical standpoint, this is a very bearish signal because the Nasdaq should have attempted to rally off support into the close if the uptrend is going to remain intact. However, the S&P 500 index is still above both the 20 and 40 day moving averages, so we are continuing to see divergence between the two indexes. The S&P bounced perfectly off its 20 day moving average, which should now act as support:
Let's not forget that we are still in a pre-holiday week. My observation yesterday is that the selling was not from an abundance of sellers, but rather a lack of buyers. A quick look at the intraday chart of the S&P shows non-committal, choppy performance from about 1 pm through the close. It really only takes one or two big sellers in the market to drive prices lower when there is not much big money around to prop prices up. Therefore, I am still not inclined to say the uptrend is definitely over, but yesterday's technical breakdown in the Nasdaq certainly makes me much more cautious. Although we generally do not base trades on fundamental analysis, I have a feeling that the current indecision over what to do about Iraq is adversely affecting the markets (especially Cheney's comments a few days ago). It will be interesting to see what the post-holiday trading brings in the beginning of September.
The weakest sectors yesterday were primarily technology related. None of the sectors we follow closed in the green. However, defense sectors such as Gold, Utilities, and Pharmaceuticals closed nearly flat on the day. Here is an overview of the weakest sectors yesterday:
Networking Index (NWX) = (6.13%)
Internet Index (GIN) = (4.26%)
Semiconductor Index (SOX) = (4.12%)
Software (GSO) = (3.70%)
The bad news is that we were wrong about the Nasdaq and Semiconductors reversing yesterday. The good news, however, is that we stayed out of trouble because neither of our plays triggered for entry. This is why it is crucial to only enter our trade ideas if they hit their exact trigger prices or better. By not entering either of our plays yesterday, we protected our profits from the beginning of the week. Our goal is never to be in the markets every single day; rather, our goal is to make consistent profits over the long run. By only trading days that give us clear signals, we greatly enhance our odds of profitability week after week and month after month.
Let's not forget that we are still in a pre-holiday week. My observation yesterday is that the selling was not from an abundance of sellers, but rather a lack of buyers. A quick look at the intraday chart of the S&P shows non-committal, choppy performance from about 1 pm through the close. It really only takes one or two big sellers in the market to drive prices lower when there is not much big money around to prop prices up. Therefore, I am still not inclined to say the uptrend is definitely over, but yesterday's technical breakdown in the Nasdaq certainly makes me much more cautious. Although we generally do not base trades on fundamental analysis, I have a feeling that the current indecision over what to do about Iraq is adversely affecting the markets (especially Cheney's comments a few days ago). It will be interesting to see what the post-holiday trading brings in the beginning of September.
The weakest sectors yesterday were primarily technology related. None of the sectors we follow closed in the green. However, defense sectors such as Gold, Utilities, and Pharmaceuticals closed nearly flat on the day. Here is an overview of the weakest sectors yesterday:
Networking Index (NWX) = (6.13%)
Internet Index (GIN) = (4.26%)
Semiconductor Index (SOX) = (4.12%)
Software (GSO) = (3.70%)
The bad news is that we were wrong about the Nasdaq and Semiconductors reversing yesterday. The good news, however, is that we stayed out of trouble because neither of our plays triggered for entry. This is why it is crucial to only enter our trade ideas if they hit their exact trigger prices or better. By not entering either of our plays yesterday, we protected our profits from the beginning of the week. Our goal is never to be in the markets every single day; rather, our goal is to make consistent profits over the long run. By only trading days that give us clear signals, we greatly enhance our odds of profitability week after week and month after month.
I am watching PPH for an entry on the long side today. This is the HOLDR for the Pharmaceutical Index (DRG), which is one of the few sectors that has not yet broken any technical support levels on the daily chart. This relative strength indicates it will probably be one of the first sectors to rally when the broad market does. I also feel more comfortable having a long setup that trades with the S&P versus the Nasdaq because of the price divergence we have seen between the two indexes during the past few days. However, due to the market weakness, we are once again making the price confirm the rally by setting our trigger price above several days of price resistance. As always, if it does not hit our exact trigger price, forget about it!
Trigger = 76.10
Target = 77.50
Stop = 75.25
One of the reasons PPH has been holding up so well is because of the big support base it has in the 74 - 75 range. The longer of a consolidation period an index or stock has before breaking out, the more support that consolidation will serve as when the stock pulls back down to the pre-breakout level. If there was only a few days of price support at 74 instead of a month's worth of support, PPH would probably be below 74 by now.
This is not a recommendation or solicitation to buy PPH. Rather, I am just sharing with you a trade idea that I will be looking to enter today if it hits my trigger price.
Trigger = 76.10
Target = 77.50
Stop = 75.25
One of the reasons PPH has been holding up so well is because of the big support base it has in the 74 - 75 range. The longer of a consolidation period an index or stock has before breaking out, the more support that consolidation will serve as when the stock pulls back down to the pre-breakout level. If there was only a few days of price support at 74 instead of a month's worth of support, PPH would probably be below 74 by now.
This is not a recommendation or solicitation to buy PPH. Rather, I am just sharing with you a trade idea that I will be looking to enter today if it hits my trigger price.
I trade nothing but the Spyders, specifically Spy. The spread can be the difference of whether or not you make money. The spread on the SPY is deceiving most of the time. If there is no reason to put on a trade, (I.E. no direction/momentum) the spread can be .04 to .06. At the first hint of direction the spread promptly widens up to .15 or more. Now lets say you are trading 1000 share lots and using SuperDot. The second you put on the trade you can plan to be out 300 bucks. Look at this way. If you buy the Ask and sell to the Bid you are paying as much as a 300 commission to the specialist for the privilege of putting on the trade. Thats 30% if you are looking for a dollar. IMHO, you have to decide the direction and bid for the stock in the quiet time before it moves, hope you get filled, and then use a fairly wide stop. I use .42 and I look for 1.40 return (the minimum daily range of the SPY). Since I have a targeted return, I don't worry about the spread when I close the position. If the position is a winner I always get out by offering the stock to someone else thereby saving the spread. Saving the spread is the best reason I know to have an exit point in thought before you place the trade. But you have to trade your exit point with a limit order and get it in early, otherwise you will find yourself behind accumulated size and not get filled unless it is in the specialist's best interest which is usually not in yours. If you don't, it will cost you the spread. Trading is one place where if you sign up early, you don't have to stand in the line.
Tradesman:
I couldnt agree with you more. SPY is my single WORST stock among hundreds of different stocks I have traded this year. The reason is exactly the reason you stated above. So I have been trying to figure out a way to figure out when/if the market will trend one way or the other. Still havent figured it out yet.
I couldnt agree with you more. SPY is my single WORST stock among hundreds of different stocks I have traded this year. The reason is exactly the reason you stated above. So I have been trying to figure out a way to figure out when/if the market will trend one way or the other. Still havent figured it out yet.