A Few ETF/ETN Picks

A little slower moving than our stock picks.

We’re going to cover two main areas: healthcare and commodities.

First we will add both the RYH (Rydex Equal Weight Healthcare ETF) and the IXJ (iShares Global Healthcare ETF). We like several stocks in the Healthcare sector right now and these two are a good way to cover it all with a lower volatility package. Look for specific stock picks to follow as we expand on this theme and follow the sector rotation of capital.

Next up are the recently beaten down commodity plays. Here we’ll pick up the JJA (iPath Dow Jones-AIG Agriculture Total Return ETN), KOL (Market Vectors Coal ETF) & GAZ (iPath Dow Jones-AIG Natural Gas Total Return ETN) while they are on sale. While KOL is an ETF comprised of stocks, that provides targeted exposure to companies worldwide that are engaged in the coal industry; both JJA & GAZ are Exchange Traded Notes based directly on the commodities. GAZ tracks the Henry Hub Natural Gas futures contract traded on the NYMEX.  JJA includes Soybeans, Corn, Wheat, Soybean Oil, Sugar, Coffee & Cotton with Soybeans & Corn comprising half of the weighting while the Softs (Sugar, Coffee & Cotton) only hold barely a quarter all together with Wheat & Soybean Oil roughly sharing the final 22.5%.  To balance out this mix, consider adding JJS (iPath Dow Jones-AIG Softs Total Return ETN) which includes roughly a third each of Sugar, Coffee & Cotton.  Finally, another Soft totally missed by the larger ETNs, yet available alone, is NIB (iPath Dow Jones-AIG Cocoa Total Return ETN).

Both JJS and NIB are barely a month old so there is not much to go on, but the charts of the underlying futures contracts look poised to bounce.  At this point, we would only nibble on NIB and use JJS to balance out the weighting of the JJA if you are trading large positions or have a strong desire to be equally allocated.

5 Responses to A Few ETF/ETN Picks

  1. Jason says:

    Adding a short ETF here.

    SKF – UltraShort (2X) Financials ProShares

  2. Jason says:

    We’ll take the 15.4% gain on SKF here.

  3. Jason says:

    Getting ready for the year end rally.

    IYT – iShares DJ Transportation Average

    ICF – Cohen & Steers Realty Majors Index

    DVY – iShares DJ Select Dividend Index

    IWM – iShares Russell 2000 Small Cap Index

  4. Jason says:

    The liquidation slide is well overdone now. We are doubling our position in each of the following on a total cash invested basis. This means we are buying the same dollar amount as our original entry, thus more than doubling our share count at these discount prices. This lowers our cost basis in each position considerably. Do not chase these positions here, set orders at the mid point of today’s range for each to start.

    RYH – Rydex Equal Weight Healthcare

    IXJ – iShares Global Healthcare

    JJA – iPath Dow Jones-AIG Agriculture Total Return ETN

    KOL – Market Vectors Coal

    GAZ – iPath Dow Jones-AIG Natural Gas Total Return ETN

    IYT – iShares DJ Transportation Average

    ICF – Cohen & Steers Realty Majors Index

    DVY – iShares DJ Select Dividend Index

    IWM – iShares Russell 2000 Small Cap Index

    We are also taking new positions in the following:

    BBH – Biotech HOLDRs

    IAT – iShares Dow Jones US Regional Banks

  5. Jason says:

    First picks 1 year update (including second buy 10/28):

    RYH +6%

    IXJ -2%

    JJA -15%

    KOL +24%

    GAZ -64%

    JJS +6%

    NIB +21%

    Average: -3%

    S&P 500: -22%

    Natural Gas is a big surprise and really weighs down the average. The initial timing on the commodity plays was pretty bad, but adding more on weakness helped. Healthcare shows why it is a defensive sector by leading the market in a time of weakness. The Soft Commodity ETNs boosted the returns with JJS and NIB only being bested by the roller coaster ride of KOL in overall return, while suffering the smallest drawdowns, even less than Healthcare.


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