Tag Archives: etf

How To Trade In Gold ETFs After Robust 30-Year Rally?

Thanks to global growth concerns, reduced expectations for rate hike, geopolitical tensions and bearishness in the stock market, gold posted the biggest first-quarter gain in three decades. In addition, the adoption of negative interest rates by most central banks such as Japan, Sweden, Switzerland, Denmark and Europe boosted the demand for gold bullion and pushed the prices higher. Investors should note that most of the gains came in the first six weeks of the year and thereafter the momentum of increase slowed down. What’s In Store? The Fed signaled that interest rates in U.S. would stay low for some time and dialed back its projection from four lift-offs to two hikes in its recent meeting. This is weighing on the dollar and propelling the price of gold. The release of minutes last week showed that the Fed is unlikely to raise interest rates in April, signaling that weak global growth could hurt the ongoing recovery in the U.S. economy. Further, continued rise in the Japanese currency dampened investors’ faith in central banks’ ability to boost growth across the globe. Further, an erratic market showed up again as volatility in oil price and weak corporate earnings in the U.S. raised demand for the yellow metal as a store of value and hedge against market turmoil ahead of the Q1 earnings season. However, the recent slew of encouraging data especially on the manufacturing activity and job growth fronts reflect strength in the U.S. economy and perked-up risk-on sentiment. As a result, the strongest Q1 rally of the yellow metal seems to be fading given that gold was up just 1.3% in the first few trading sessions of April. Considering the robust gains in the first quarter, gold is still off about 35% from its 2011 all-time high of $1,900 per ounce (read: ETFs to Gain or Lose After Strong Jobs Report ). To sum up, the stability in the financial market and an improving U.S. economy could bolster the case for rate hike again and may dull the appeal for the safe haven asset in the coming months. Given the volatile environment for gold investment, investors should place their bet on gold ETFs cautiously or could take advantage of the quick turn in sentiment with the help of leveraged or inverse ETFs. Gold ETFs These ETFs are directly linked to the spot gold price or futures and are worth watching in the coming months. These have a favorable Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook. SPDR Gold Trust ETF (NYSEARCA: GLD ): This is the largest and most popular ETF in the gold space with AUM of $32.6 billion and average daily volume of around 8.8 million shares. The fund tracks the price of gold bullion measured in U.S. dollars, and kept in London under the custody of HSBC Bank USA. Expense ratio comes in at 0.40%. The fund has added 0.6% so far this month. iShares Gold Trust ETF (NYSEARCA: IAU ) : This ETF offers exposure to the day-to-day movement of the price of gold bullion and is backed by physical gold under the custody of JP Morgan Chase Bank in London. It has AUM of $7.5 billion and trades in solid volume of more than 8 million shares a day on average. The ETF charges 25 bps in annual fees and has gained 0.7% this month (read: Ride on Gold Rally with Best ETFs and Stocks of 2016 ). Van Eck Merk Gold ETF (NYSEARCA: OUNZ ): This product seeks to provide investors with a convenient and cost-efficient way to buy and hold gold through an exchange-traded product with the option to take physical delivery of gold when desired. It charges 40 bps in fees per year but is unpopular and an illiquid option with AUM of $99.5 million and average daily volume of 42,000 shares. OUNZ is up 0.7% this month. Leveraged Gold ETFs Investors who are bullish on gold right now may consider a near-term long on the precious metal with the following ETFs depending on their risk appetite. ProShares Ultra Gold ETF (NYSEARCA: UGL ): This fund seeks to deliver twice (2x or 200%) the return of the daily performance of gold bullion in U.S. dollars. It charges 95 bps in fees a year and has amassed $89.3 million in its asset base. Volume is light at under 40,000 shares per day. The ETF has gained 0.86% in the first few trading sessions of April. PowerShares DB Gold Double Long ETN (NYSEARCA: DGP ): This ETN seeks to deliver twice the return of the daily performance of the DBIQ Optimum Yield Gold Index Excess Return, charging 75 bps in fees per year. It has accumulated $131 million in its asset base so far and trades in an average daily volume of 69,000 shares. The ETN is relatively flat so far this month. VelocityShares 3x Long Gold ETN (NASDAQ: UGLD ): This product provides three times (3x or 300%) exposure to the daily performance of the S&P GSCI Gold Index Excess Return plus returns from U.S. T-bills net of fees and expenses. The ETN has been able to manage an asset base of $64.6 million while charging a higher fee of 1.35% annually. However, the note trades in solid volume of over 546,000 shares a day on average and has returned 2% this month. Inverse Gold ETFs Any encouraging data on the economy could provide investors’ a near-term short opportunity on the bullion according to their risk appetite. DB Gold Short ETN (NYSEARCA: DGZ ): This ETN offers inverse (opposite) exposure to the performance of the DBIQ Optimum Yield Gold Index Excess Return. It has managed assets of $23.7 million so far this year and trades in a solid volume of 146,000 shares a day on average. It charges 0.75% in annual fees and has lost about 0.7% so far in April. ProShares Ultra Short Gold ETF (NYSEARCA: GLL ) : This fund seeks to deliver twice the inverse return of the daily performance of gold bullion in U.S. dollars, charging 95 bps in fees a year. It has $75.4 million in AUM and trades in lower average daily volume of 25,000 shares. The ETF has shed about 2% so far this month. VelocityShares 3x Inverse Gold ETN (NASDAQ: DGLD ): This product provides three times inverse exposure to the daily performance of the S&P GSCI Gold Index Excess Return. It has been able to manage an asset base of $17.4 million while charging investors a higher fee of 1.35% annually. The note trades in a light average daily volume of 43,000 shares and is down 2.1% so far this month. Link to the original post on Zacks.com

Apple Crosses Key Support Level, Joining Netflix, But Can It Hold It?

Update: Apple ( AAPL ) stock rose 1.2% to 111.75 on Wednesday morning, retaking its 200-day moving average after several big-cap peers did so on Tuesday. But can the iPhone maker finally close above this level, and turn resistance into support * * * Netflix ( NFLX ), Schlumberger ( SLB ), AbbVie ( ABBV ) and MasterCard ( MA ) all rose above their 200-day moving averages Tuesday, while Apple shares continued to close just below that support level. It’s not a huge surprise that several big-cap stocks retook their 200-day lines. The Nasdaq also did so on Tuesday. The Dow and S&P 500 have been above that level for weeks. Still, it’s a key step on the road to recovery. Netflix Netflix, which reports Q1 earnings on Monday, rose 4.2% on the stock market today to 107, its best level since late January. Netflix had run into resistance for several sessions just below the 200-day. Netflix has been consolidating since peaking at 133.27 on Dec. 7. (Netflix jumped 3.3% Wednesday morning to its highest since mid-January.) Schlumberger Schlumberger rallied along with the energy sector, as crude futures rose above $42 a barrel to a 4-month high. Schlumberger rose 2.7% Tuesday to 75.90, topping its 200-day line for the time since last June. (Schlumberger rose fractionally Wednesday morning.) AbbVie AbbVie rose 2.4% Tuesday, just getting above its 200-day line. It hasn’t been consistently held above that level since last August. Late Monday, the FDA approved a leukemia drug by AbbVie and Roche ( RHHBY ) unit Genentech. (Wednesday morning, AbbVie fell 1.6%, once again dropping below the 200-day.) MasterCard MasterCard rose 0.4% Tuesday to 93.86. The stock has been finding support at or above its 200-day line for the past few weeks. The stock is forming a cup-with-handle base going back to Nov. 11. (On Wednesday morning, MasterCard rose 1%.) Apple As for Apple, shares rose 1.3% to 110.44 on Tuesday, just below the 200-day line at 110.78. Apple crossed its 200-day on April 4 intraday, but has yet to close above that level since early October.

5 Simple Trading Lessons From Hell’s Kitchen

By John Benjamin Hell’s Kitchen, one of Chef Gordon Ramsay’s many reality TV shows is quite an entertaining show to watch. Chefs face off to win a grand prize of running their own restaurants at the end. However, the path to success isn’t easy as the contestants are truly put to hell. From having to deal with their peers to putting their differences aside and working as a team, Hell’s Kitchen simply draws the viewer into it. However, this article isn’t a review about Hell’s Kitchen, but rather the lessons a viewer can take away from it. From a trading perspective, there are quite some interesting nuggets of wisdom that can truly help you to become a better a trader. Here are the five biggest lessons that stand out however. 1. Never lose focus Starting from the first episode to the end, a common recurring theme in Hell’s Kitchen is the fact that contents that are the most focused and have their eyes fixed on the prize are the ones who often end up on the tops. There is a bit of luck involved too. But isn’t that the case anywhere? For traders, staying focused on their goals is what determines the best from the rest. There are ups and downs, but that doesn’t mean you have to give up because you hit a losing streak. In Hell’s Kitchen, some of the top chefs hit rock bottom, often coming close to being eliminated. However, some of them manage to bounce back simply through sheer determination and focus to come out on the tops. Never lose focus 2. Preparation is important The main event in every episode of Hell’s Kitchen is the grand service that is put out. This is often a time of high pressure and shows Gordon Ramsay at his very best, swearing at the contestants and going nuts. It is a recurring theme to find contestants either running out of ingredients or failing to have a backup plan. It does sound a bit familiar in the trading world doesn’t it? In the heat of trading, the stress a trader goes through is no different. However, the preparation that one needs to do ahead of trading is very important. Do you take time out to analyze the charts or understand the main driving themes for the day? Do you really have a plan of attack? Always prepare yourself before you start trading. Get to know the markets and what’s driving them 3. Constant learning Another impressive feat from the Hell’s Kitchen winners is the fact that it is not your education or your experience that matters. There have been winners on the show who were not even professional chefs to begin with. What they lack as experience or education is made up by the zeal to learn and improve on their weaknesses. For traders, this is a very important lesson. Learning doesn’t necessarily mean having to buy tons of books and read through them all. Lessons can be found anywhere. From a losing trade to a winning trade, you only need to know where to look. Some of the most successful traders often ensure that they always learn something from a losing trade and most importantly, ensure that they don’t repeat it again. The constant loop of feedback and learning ensures that you overcome your weakness over time. 4. Strategize Every episode of Hell’s Kitchen concludes with a best performer of the evening having to put up two contestants on the hot seat for elimination. Quite often you will come across contestants being put up for elimination in a strategic way. Eliminating the biggest competitor and moving one step closer to the goal. While this works, there are also instances where the strategy backfires, such as the competition being put up for elimination quite early on. An important lesson for traders is strategy and timing. You can have a great strategy, but if you miss out on the timing it can backfire. A great example is where you find a nice reversal candlestick pattern on the charts and you execute it. However, pullbacks can be frustrating. Without correct timing to execute your strategy you could end up under water for quite a while. While strategy is important, timing also plays a crucial role when it comes to your trading plan 5. Consistency is key! Finally, a recurring theme among the winners of Hell’s Kitchen is their consistency to keep up their performance and standards. There are many contestants on Hell’s Kitchen who start with a bang but soon fizzle out under pressure. Likewise, there are contestants who start off weak but manage to rise to the challenge only to peak out and get eliminated. Staying consistent is one of the key aspects for trading as well. Almost any trader at some point has had a winning trade, but if you are not consistent in your trading chances are that you will simply peak out at some point. Consistency is not about having a winning streak; it is all about how well you can trade according to your plan. For traders, consistency plays a big role in the longer term success of your trading. The better you are at consistently churning out winners, the more the chances of you staying in the trading game for the long term. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.