Smoking Securities

Half Baked High Finance

Portfolio Theory $DBC $EEM $IWN $IYR $PLW

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A look at the 5 least correlated liquid ETFs.
Commodities have stabilized over the last two months, but DBC technically remains in a downtrend. Long positions are remain speculative, but my gut tells me that there is more risk being short than long.
The bounce I was looking for in emerging markets never materialized, and EEM remains in a downtrend. The potential for a massive head and shoulders pattern remains, but caution is warranted for those looking to invest abroad.
Small cap value stocks remain in a downtrend, but there isn’t much volume to confirm the recent price action. IWN continues to flirt with the lower Bollinger, so there is little reason to look for upside, even though a new X has been printed.
Real estate remains the weakest sector, and volume appears to increase during sell offs, confirming my bearish outlook. IYR is not showing signs of recovery, and that does not bode well for the rest of the market.
Despite market weakness, Treasuries weakened this past week. This is a bullish sign, and I love the prospects of TBT. Nevertheless, a strong bounce off the trend line is likely, so another run to risk free yield may be in the works this week.

Day trading remains the name of the game, but in the next few weeks, I hope to reveal a longer term strategy that takes advantage of the incredible volatility. TBT remains my favorite long, but I’m still unwilling to hold large positions overnight. The real estate and financial sectors remain the primary tells for the market, but also look for small cap out performance if a bullish trend emerges.
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Written by chucklesamadeus

January 25, 2009 at 10:51 am

Posted in DBC, EEM, IWN, IYR, PLW, Portfolio Theory

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