Category Archives: ETFs

A Hedged Bet Against China

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Every trading day, Portfolio Armor ranks all of the hedgeable stocks, ETFs, and other exchange-traded products in the U.S. by its estimate of their potential return over the next six months, based on an analysis of price history and option market sentiment. Then it subtracts hedging costs, and ranks them all by potential return net of hedging costs, or net potential return. It’s a method of security selection we backtested 25,412 times over an 11-year time period during which it generated solid returns, on average.

On Thursday, the highest-ranked ETF, and the 7th-ranked security overall, was the Direxion Daily FTSE China Bear 3X Shares ETF (YANG), a triple-levered bet against China, with a potential return of 13.6% over the next six months.

As of Thursday’s close, you had a shot of capturing that potential return, while limiting your downside risk to 13.6% – and getting paid to hedge – by using the optimal collar below: (more…)

ETF Walkabout

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As the post-“crash” recovery lurches to another high, the mainstream media and bulls are splooging left and right:


I am surprisingly nonplussed about the entire affair. I remain extraordinarily short, and although I covered some nice money-makers early this morning (WDC, MTW, STX) and had a couple of profitable intraday ETF trades (DIA, EEM, both on the short side, incredibly), I have simply held on to the vast majority of my individual shorts.

I wanted to share six ETFs tonight and my disposition toward each: short and sweet. First up is the triple-bearish-on-miners symbol DUST, on which I am bullish, as we appear to be heading toward a quadruple bottom: