Yesterday, the markets delivered outstanding performance and some exchange traded funds (ETFs) finished up in the double digits.
But one good day doesn’t mean we’re out of the slump yet. It’s still time to take a defensive stance with your portfolio and make sure you’ve got that exit strategy firmly in place. But while it seems as though everything is in a downward spiral, but there are still some buying opportunities, believe it or not.
At our asset management firm, we track a list of about 100 ETFs and review it daily to see how things are performing and if there are any trends emerging. Of particular interest to us is which funds are above their 200-day moving averages. We never buy something sitting below that line.
Once we own an ETF, we keep an eye on it to make sure it’s still above that line and continuing to perform. Once it dips below the trend line or falls 8% off its high, we sell. No ifs, ands or buts. A sell strategy from which emotions are entirely removed is the only kind that will benefit any investor.
It can be hard to let go of a little mover and shaker you’ve always had that soft spot for, but if you want to protect your money, you have to. It’s like your parents always said when they were grounding you every other week: "This hurts me more than it hurts you." But sometimes it has to be done for everyone’s good.
There are no guarantees that when you let a fund go, it’s not going to turn around and deliver the numbers again. But that doesn’t mean it won’t, either. It’s exactly why you have to remain as stoic as possible and stick to the plan and rationalize nothing.
There are a number of ETFs sitting well above their trend lines. Take a look at them, keep an eye on them and if they fit into your overall portfolio and are moving in an overall upward direction, they could be well worth considering:
- iShares MSCI Taiwan Index (EWT), 6.2% above
- Claymore/BNY BRIC (EEB), 5.9% above
- iShares S&P Latin America 40 Index (ILF), 10.1% above
- iShares MSCI Brazil Index (EWZ), 13.7% above
- Market Vectors Russia (RSX), 8.1% above
- iShares S&P GSSI Natural Resources (IGE), 6.8% above
- PowerShares DB Commodity Index Tracking Fund (DBC), 27.7% above
- iShares S&P GSCI Commodity-Indexed Trust (GSG), 23.9% above
- United States Oil Fund (USO), 28.3% above
- iShares Dow Jones US Oil & Gas Exploration Index (IEO), 14.4% above
- Energy Select Sector SPDR (XLE), 6.7% above
- iShares Dow Jones US Energy (IYE), 6% above
- Market Vectors Steel (SLX), 14.4% above
- iShares COMEX Gold Trust (IAU), 21.2% above
- streetTRACKS Gold Shares (GLD), 21.1% above
- Market Vectors Gold Miners (GDX), 16.5% above
- iShares Silver Trust (SLV), 30.3% above
- SPDR S&P Metals & Mining (XME), 11.5% above
- PowerShares DB Base Metals (DBB), 8.5% above
- PowerShares DB Agriculture (DBA), 30.8% above
- Market Vectors Global Agribusiness (MOO), 11.4% above
- CurrencyShares Euro Trust (FXE), 6.9% above
- CurrencyShares Swiss Franc Trust (FXF), 10.2% above
- CurrencyShares Japanese Yen Trust (FXY), 8.5% above
For full disclosure, some of Tom Lydon’s clients own shares of EWT, IEO, DBB and DBA.
Read the disclosure, as Tom Lydon is a board member of Rydex Funds.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.