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Monday, June 21, 2010

Weekly ProShares review -- bulls still at work but enthusiasm has waned

For the last couple of weeks I have been presenting a list of the ProShares ETFs that had exhibited the strongest performance over the course of the last week. I received a number of comments over at Seeking Alpha requesting that I do it again but I haven't had much reaction since then. If you find this useful please leave a comment and let me know!

A short recap on  leveraged ETFs and why I look at them --

The ProShares leveraged ETFs are primarily short-term trading vehicles and, as such, they can be viewed as indicators of short-term sentiment.

Since these ETFs come in so many styles and sectors, looking at the leaders among them can paint a picture of those areas of the market in which short-term investors are currently most interested.

The following table lists those members of the ProShares family that have turned in the best performance over the course of the last week (the period from last Tuesday through this Monday). The last two weeks the criteria included any ETF with double-digit gains. This week there's only one ETF in that category so we have included all those ETFs with a 5% gain or more.

Note also that I compare this week's average volume to the previous week's average volume. Increased volume may confirm increase in price as an indicator of a move with staying power.

Symbol Fund Name Group Objective Percent Change - Price Percent Change - Avg Volume
XPP Ultra FTSE/Xinhua China 25 Ultra 200% of the underlying 10.1% -9.2%
EET Ultra MSCI Emerging Markets Ultra 200% of the underlying 7.8% 16.4%
UYM Ultra Basic Materials Ultra 200% of the underlying 6.6% -24.1%
USD Ultra Semiconductors Ultra 200% of the underlying 6.6% -51.1%
UPRO UltraPro S&P500 Ultra 300% of the underlying 6.3% 7.4%
UXI Ultra Industrials Ultra 200% of the underlying 6.2% 26.2%
DIG Ultra Oil & Gas Ultra 200% of the underlying 6.0% -39.2%
UWC Ultra Russell3000 Ultra 200% of the underlying 5.9% -32.8%
UCO Ultra DJ-UBS Crude Oil Ultra 200% of the underlying 5.8% -16.0%
QLD Ultra QQQ Ultra 200% of the underlying 5.7% -22.0%
UPW Ultra Utilities Ultra 200% of the underlying 5.5% 11.0%
EZJ Ultra MSCI Japan Ultra 200% of the underlying 5.5% -38.5%
EFO Ultra MSCI EAFE Ultra 200% of the underlying 5.4% -13.6%
ROM Ultra Technology Ultra 200% of the underlying 5.3% -32.5%

With the yuan exchange rate news, it's not a surprise to see XPP at the top of our list today. Note, however, that out of the week's 10% gain, almost 7% of that gain came today. In a broader context, EET has also moved up nicely and steadily over the course of the week and the gains came on increasing volume to boot.

Two big themes of the recent bullishness have been Basic Materials and Industrials. We see two ETFs in these sectors continue to occupy spots near the top of this list. UYM gained over 6% but volume was down 24%. On the other hand, UXI also gained over 6% but volume increased this week by 26%. With many economic reports pointing to a real recovery in manufacturing, investors are still jumping into this sector with conviction.

It wouldn't be a Trade Radar post if I didn't touch on the tech sector at some point. Despite mixed outlooks from various analysts on the semiconductor sector, investors are voting with their dollars and USD turned in the fourth best performance this week though volume was down 50%. Similarly QQQ and ROM were both up while volume declined.

Utilities are a typically defensive holding and interestingly  we see that UPW, the Ultra Utilities ETF, advanced this week on an increase in volume.

Conclusion --

Bulls still rule as, once again, all the top ETFs are double long Ultra ETFs this week. Still, the decrease in volume shows investors may be getting skittish with some of the riskiest sectors.

Disclosure: long ROM and USD


Anonymous said...

I've been holding QID for about a year. A sort of whim long-term hedge. Had a roll-over that I'd toyed with putting in an Asian or foreign index as a long term hedge against my limited choice 401K (slightly Nasdaq weighted). Is this a crazy way to hedge? A long term sure failure? So far it has seemed that way, but it looks like it may even out soon. It's only 1% of my total "portfolio", and if I felt I could find a better long hedge against my 401K Vantage holdings I would have added to it. Just curious. Thanks for sharing your thoughts.

TradeRadarOperator said...

Holding QID long term is not something I am favor of. These leveraged ETFs work best in trending markets only for those who like to hold them as more than a day trade.

There are many financial advisers who recommend holding foreign or Asian stocks as an important part of a portfolio since their growth is expected to be stronger. Sounds like a good idea to me.

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