Market CommentsMarkets staged a strong rally on Thursday that accounted for most of the gains seen this week. Interestingly, part of the impetus for the rally was an employment report from ADP that most analysts felt was largely overstated. The other incentive for investors was the announcement of the rescue plan for sub-prime homeowners by President Bush and Treasury Secretary Paulson. I am not sure why this was such a strong catalyst for a rally when nothing that wasn't already known was presented. Markets took off anyway and we now have two weeks in a row where the major averages achieved gains.
In other news that had an unexpected effect, OPEC held production steady and the US government reported a large draw-down in crude stocks. Instead of rallying, oil actually fell and finished the week down slightly.
The anxiously awaited Labor Dept. payrolls number was announced Friday. Expected to be market-moving news, especially in light of the ADP number, the actual numbers indicated continued slight growth in the economy. Friday the markets went nowhere and attention is now on the FOMC meeting next week. With payrolls showing no threat of a recession, does the Fed cut 25 or 50 bps? or not at all?
TradeRadar Portfolio UpdateIt has actually been two weeks now since I last wrote about the TradeRadar model portfolio. It has, once again, been a volatile two weeks and stops have been hit.
First, let's look at what was sold during this time.
ProShares Ultra Short Real Estate ETF (
SRS)
We have held this ETF for quite a while now, having opened the position back in May. We didn't start using a stop until recently so we have weathered quite a few ups and downs. Recently, we had our stop set at $95 but when the ETF started getting up around $120 I moved the stop up to $105. On November 30, markets rallied strongly and SRS opened with a good sized gap down and the stop was hit immediately on the open. SRS was sold for $100.50 for a 16.5% gain.
ProShares UltraShort QQQ (
QID)
Previously we cut this position in half but recently we added a few more shares at $38.58 as the NASDAQ was heading down. I set a stop of $38.50 that would at least protect the capital of the new shares. The original shares were purchased at $48.39. During the last two weeks the ETF moved into the mid-$40's. Then the NASDAQ rallied on November 28 and QID opened with a gap down. The entire position was sold at $38.48. The loss on this last batch of shares was 11.5%
ProShares UltraShort Financial ETF (
SKF)
It was only on November 7 when we opened a position in SKF. This ETF followed its usual volatile path and managed to sneak above $110.
