RSSTrading ETFs
By Jim Farrish | October 13, 2008 | 7:04 PM | 0 Comments
As we discussed Friday, the key to building your portfolio, is the ability to look forward with some confidence. I won’t go so far as to say there was confidence in today’s market as much as there was hope, but we did bounce. As promised my goal each day is to follow up on my Sector Exchange podcast. The weekly outlook discusses what is moving and what’s not. This week we are looking at the ETFs below and determining if they are worth playing short or long term. The goal is to help you see how to develop discipline in your trading as well as finding opportunities by breaking the market down into sectors. Most sectors now have ETFs that track them allowing me to use them as a simple tool for investing.
Energy was on my watch list as a potential bounce assuming some of the fear subsided in the financial world. That happened over the weekend giving us the move higher we experienced today. USO (NYSE: USO) is the ETF for US Oil and closed at $68.10 today. $68.90 would be the break point I want to see to take a short term position. The initial target would be $73.30. I would maintain a tight stop as this sector is not exactly operating on sanity.
Banks are still on my watch list after the selling last week. The big question mark remains what Mr. Paulson will do. The meeting in Washington will hold some answers of who the lottery winners will be on the bailout. The terms attached to the money injected into these banks will be a key as well. Not looking to win the lottery on this play, just enough to make the risk worthwhile. KBE (NYSE: KBE) is the ETF I am going to use on this play. The break above $28.30 is the point I want to hold in order to play the sector. $30 will give some resistance and $36.80 is the target. This is likely to be a volatile play and you need to evaluate that prior to putting any money to work. The volatility would require a loser stop to give the news room to work through on a daily basis.
I will have more tomorrow on the other sectors from this week’s Sector Exchange podcast. Small cap is showing some positive signs again as well as technology. I like the software sector under technology as a potential leader for the sector.
See you tomorrow.
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