ETFavorites – September ETF Buy Limit Orders


We have a select list of Exchange Traded Funds (ETFs) that we use for our portfolios. I have screened these funds for their internal fundamentals and holdings, as well as, long-term performance metrics. These are the funds that have done the best over time and are positioned to continue doing well in a changing world. These are great tools for building a tactically diversified portfolio or as bolt on holdings for a stock portfolio.  

Refer to the grids below to see the Exchange Traded Funds – ETFs – that we are considering investing in. In each chart will be the fund name, symbol, buy range and a very brief rational for our bullish interest or general notes. There will generally be stocks in 20 to 30 ETFs in addition to the SPY, QQQ, DIA and SPDR Selects which are the core I build around. We also use a few Closed End Funds – CEFs.

Using Limit Orders

We extensively use “limit” orders to set up buys. This beats sitting around in front of a computer watching green and red numbers that mean little to nothing. The price you set your buy limits at will depend on your risk tolerance, outlook and investment approach. The buy range is based upon fundamental and technical factors which I have made far more conservative due to the decreasing demand for financial assets by baby boomers, which is a massive sea change in the investment world, and that threatens to cause greater volatility.

The buy price ranges are consistent with looking for a blend of margin of safety and investment opportunity. The lower you buy, obviously the greater margin of safety. You need to answer for yourself how much safety you need.

In general, I recommend buying a small starter position near the high-end of the buy range and a bigger position at the bottom of the buy range. By establishing a buy limit near the high-end of the buy range, you can often gain as these holdings are recognized as valuable and don’t generally trade low for long.

The lower-end of the buy range recognizes that markets have become more fragile and more likely to exemplify extreme behavior relative to the past – consider the 1000 point down day on the Dow on August 24th, 2015. It is okay to only buy the low-ends of the buy range and simply wait for the very bad days and weeks to be a buyer. In fact, I think that is a great strategy for patient investors looking to manage risk. 

I am listing the “Bull Rationale” for these ETFs. You should search out the bear scenarios before investing and consider those.

These ETFs are used for the Global Trends ETF portfolio and Quarter Million Dollar portfolio which are position trading portfolios (most holdings are for a year or more). Swing Trading Opportunities, generally using options on these ETFs, as well as, a wider range of ETFs are primarily technical based, so, those do not appear on this page. To Swing trade, generally with holding periods from a few weeks to a few months, you should have experience or start very small. 

Changes from last month will be in yellow.

Pale green is in or very near the buy range – remember to scale in as appropriate for your risk level.

See the Research section and Forum for research on various ETFs we are investing in. 

 

 Fund Symbol Buy Range Notes
 Market Vectors Africa AFK 16-18 Fast growing due to youth, prior underdevelopment and resources. Very volatile.
 Market Vectors Biotech BBH 89-101 Top performing large cap biotech fund, 27 holdings, concentrated
 Central Fund of Canada CEF 10.50-11.80 2/3 gold bullion, 1/3 silver bullion, useful if we get another QE
 SPDR Dow Jones Industrial Average DIA 136-164 Dow Jones Industrial Average
 Global X SuperDividend U.S.  DIV 17-23 High dividends across various equities, inlcuding MLPs and REITs. 
 iShares MSCI Australia EWA 17-19 Will benefit from oil/commodity rebound and proximity to China.
 iShares MSCI Canada EWC 19-22 Will benefit from oil/commodity rebound and proximity to U.S.
 iShares MSCI Mexico EWW 34-49 Will benefit from youth, tourism, proximity to U.S. however will be volatile
 First Trust ISE-Revere Natural Gas FCG 18.75-22.50 Index is reconstituted towards stronger survivors in the field. Look to enter before summer cooling season.
 Market Vectors Gold Miners ETF GDX 13-17 If central banks print more to stimulate, becomes very attractive. Due for a pullback.
 SPDR Gold Shares GLD 95-118 100% gold bullion, useful if we get another QE
 iShares Nasdaq Biotechnology IBB 216-254 All-cap biotech though weighted large cap, 2nd best performing, 190 holdings
 iShares India  INDA 24-26 Young, developing infrastructure, tech savvy and fast growing though likely for a slowdown short-term. 
 iShares Russell 2000 IWM 88-106 Russell 2000 SMID cap
 SPDR Barclays High Yield Bond JNK 25-32 Good source of income after major corrections
 PowerShares Agribusiness MOO 33-43 Food which is a derivative play on water
 PowerShares HY Equity Dividend Achievers PEY 10-13 Strong dividend paying companies which has been a historically strong strategy
 PowerShares Buyback Achievers PKW 27-42 About the only thing holding stocks up have been buybacks
 PowerShares FTSE RAFI US 1000 PRF 63-79 Strong dividend and fundamental weighted alternative to S&P 500 Index
 PowerShares QQQ QQQ 70-90 Nasdaq 100, very good somewhat diversified performer, easy to write options on
 Guggenheim S&P 500 Pure Value RPV 33-44 Low cost value approach with strong dividends and very good history
 SPDR S&P 500 SPY 147-189 S&P 500 Index, large cap benchmark
 Guggenheim Solar TAN 18-22 High growth sector with government support
 ProShares Short VIX Short-Term Futures SVXY 20-30 Deteriorates in our favor. Worth buying off of big volatility spikes. Leveraged, so don’t trade.
 iShares 20+ Yr Treasury Bond TLT  127-129 Where the money will go on a flight to safety.
 DB U.S. Dollar Index Bullish UUP 23-24 Setting up for reversal higher on global volatility and significant rally, however, carries long-term risk
 iPath S&P VIX Short-term Futures VXX 13-14 Volatility likely to pick up summer 2016
 SPDR Select Materials XLB 33-36 Far off
 SPDR Select Energy XLE 50-60 Setting up for rally after retrace
 SPDR Select Financial XLF 17-21 Rising risk
 SPDR Select Industrial XLI 41-48 Flat due to slow growth and rising wages
 SPDR Select Technology XLK 29-35 Where the innovation and new profits are 
 SPDR Select Consumer Staples XLP 41-45 Flat to slighly rising due to slow growth but rising wages
 SPDR Select Utilities XLU 41-45 Strong short-term, however, long-term risks
 SPDR Select Health Care  XLV 53-60 Long-term growth opportunity, but beware of politicians with axes
 SPDR Select Consumer Discretionary  XLY 63-69 Near top of current cycle, buy on pullbacks
    
    
    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 *I generally use * I use the SPDR Select Sector funds due to the extra liquidity and option liquidity, however, the Vanguard and iShares equivalents are virtually identical and can be used in the SPDR’s place if your brokerage offers lower trading commissions on those.