ETF Market Notes: End of Year ETF Trading and Investing Strategies
In a report on Bloomberg TV last Friday, JP Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating)on Friday hinted that the relatively high number of fund managers who were underperforming going into the fourth quarter of 2009 meant that investing styles favoring growth, small-caps and cyclicals may have better fourth quarters than value, large-cap and defensive plays. Here are some of the exchange-traded funds (ETFs) that traders and investors interested in taking advantage of this theory may want to consider reviewing.
Small Caps:
iShares Russell 2000 ETF
(
IWM |
Quote |
Chart |
News |
PowerRating) (below)
iShares S&P Small Cap 600 Index ETF
(
IJR |
Quote |
Chart |
News |
PowerRating)
The iShares Russell 2000 ETF, IWM, is one of the less overbought equity index ETFs in the market right now. Having just entered overbought territory on Wednesday’s close, Wednesday marked the second day in a row in which sellers overwhelmed buyers going into the end of day.
Growth:
Vanguard Growth ETF
(
VUG |
Quote |
Chart |
News |
PowerRating)
iShares Russell 1000 Growth Index ETF
(
IWF |
Quote |
Chart |
News |
PowerRating)
Cyclicals:
Consumer Discretionary Select Sector SPDRS ETF
(
XLY |
Quote |
Chart |
News |
PowerRating)
SPDR S&P Retail ETF
(
XRT |
Quote |
Chart |
News |
PowerRating) (below)
After closing higher for three days in a row coming off the early November lows, the SPDR S&P Retail ETF, XRT, causing the ETF to pullback from overbought conditions above the 200-day.
And for the bolder among you who are considering speculating against those sectors JP Morgan suggested may lag in Q4, here are some inverse or short ETFs that more sophisticated traders and investors might want to keep an eye on.
Short Value:
ProShares UltraShort Russell 1000 Value Index ETF
(
SJF |
Quote |
Chart |
News |
PowerRating)
Short Large Cap:
ProShares Short Dow 30 Trust ETF
(
DOG |
Quote |
Chart |
News |
PowerRating) (below)
A four-day sell-off has pushed the ProShares Dow 30 Trust ETF, DOG, into extremely oversold territory below the 200-day moving average. How extreme? DOG has closed with a 2-period RSI of less than 2 for the past three days.
Short Defensive:
ProShares UltraShort Consumer Services ETF
(
SCC |
Quote |
Chart |
News |
PowerRating)
By the way, if you are new to short or inverse ETFs, then be sure to review our column: What You Need to Know About Trading and Investing in Short ETFs.
Did you know that our PowerRatings work for exchange-traded funds too? If you’ve been looking for help in trading ETFs in both bull and bear markets, then our ETF PowerRatings may provide the solution you are looking for. Click here to start your free, 7-day trial today!
David Penn is Editor in Chief at TradingMarkets.com.