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Posts Tagged ‘recent articles’

ETFs And Allocations To Protect Portfolios In The Current Financial Storm

October 24th, 2011

This is a followup to a previous postings suggesting how investors can take refuge in the oncoming financial storm. If you’ve not done so already, be sure to read my previous post Say It Ain’t So for a description of our dismal macroeconomic Read more…

ETF, Real Estate, Uncategorized

The New Oil Dynamics

October 17th, 2011

The oil market changed back in 2009, but most Americans did not notice. That was the year, for the first time, China temporarily surpassed the United States as Saudi Arabia’s biggest and most important Read more…

Uncategorized

ETFs Turn Exotic – Protect yourself

October 17th, 2011

Investments that do not move in tandem with U.S. stocks present opportunities for diversification and potential performance Read more…

Commodities, ETF, OPTIONS, Real Estate, Uncategorized

European Default Inevitable — Sell Your Gold?

October 7th, 2011

In the prequel to this article (European Default Inevitable — Sell Your Gold?), I discussed the fact that safe-haven-seeking investors could be in for a surprise when they run to buy gold after a Greek default and find huge sellers in Read more…

ETF, Mutual Fund, Uncategorized

Valuations in Free-Fall: S&P 500 Cheapest Since 1957!

October 5th, 2011

The Standard and Poor’s 500 index valuation has hit 25% below the average from the last nine recessions, even as price estimates continue to fall, according to Bloomberg‘s data. These estimates provide a statistically significant outlook on analyst Read more…

Uncategorized

The Next Crash Could Be Alot Worse

June 12th, 2011

Lots of pessimism since QE2 is deemed a failure and no QE3 is coming.   Here’s one article that reminds us to ensure we are risk aware and maintain an intelligently adusting protection strategy.     Posted at Seeking Alpha by Michael T. Synder   http://seekingalpha.com/article/274478-the-next-crash-could-be-a-lot-worse

The Next Crash Could Be Alot Worse

here’s a lot of emotion in this market at the moment, and the conversations among traders are nearly all leaning toward the bear side

So what are some of the signs that this downturn on Wall Street may turn into a full-blown crash?

Well, according to the Wall Street Journal, junk bonds are being sold off at an alarming rate right now. Does the following quote from the Journal remind anyone of 2008 at least a little bit?….

A steep decline in prices of bonds backed by subprime mortgages has spread through the riskiest segments of the credit markets, ending rallies in high-yield corporate bonds and commercial real-estate debt.

Also, many of the big Wall Street banks are already laying off workers. In a previous article I wrote about the potential for Wall Street to go into “panic mode“, I noted that Goldman Sachs (GS), Bank of America (BAC), JPMorgan Chase (JPM) and Morgan Stanley (MS) are all laying people off or are considering staff cuts.

The truth is that the big banks on Wall Street are not nearly as stable as most people think that they are. Moody’s recently warned that it may downgrade the debt ratings of Bank of America, Citigroup and Wells Fargo.

Another major story on Wall Street right now is oil. OPEC recently announced that oil production levels will not be raised, even though the price of oil has been hovering around $100 a barrel.

World oil supplies are very tight right now. In fact, the globe actually consumed 5 million barrels per day more oil than it produced during 2010. This was possible because the difference was apparently made up by drawing down reserves.

But if oil supplies are this tight already, what is going to happen if a major war (as opposed to all of the minor wars that are already happening) erupts in the Middle East?

The world is sitting on the edge of a financial disaster.

It is important to keep in mind that Europe is also in far worse financial condition than it was just prior to the financial collapse of 2008.

It is being reported that German finance minister Wolfgang Schaeuble is convinced that a “full-blown” financial meltdown by Greece is a very real possibility. The cost of insuring Greek debt has soared to a brand new record high, and officials all over Europe are in panic mode.

But financial problems are not just happening in Greece. The largest bank in France has just cut in half the amount of cash that customers can withdraw from ATMs each week.

Most Americans don’t spend much time thinking about the financial condition of Europe, but the truth is that what happens in Europe is going to play a major role in the months and years ahead.

Of course most Americans already know that the U.S. government is a financial mess.

As the “debt ceiling deadline” of August 2nd draws closer, the U.S. government has been raiding retirement funds in order to stay under the debt limit.

Many investors are quite nervous about what may happen if the U.S. government actually does start defaulting on debt on August 2nd.

Others claim that the U.S. government is already in default.

The only Chinese agency that gives credit ratings on sovereign debt says that the U.S. government “has already been defaulting” and the Chinese government has been repeatedly warning that the U.S. needs to get its finances in order.

In any event, this debt ceiling drama will get resolved one way or another.

The bigger question is this….

How is the U.S. government going to respond when the next financial crash happens?

Back in 2008, the Federal Reserve and the U.S. government took unprecedented steps to prop up Wall Street.

But can they really do that again if we see another major crash in 2011 or 2012?

Many believe that things will be totally different this time around. Just check out what Jim Rogers recently told CNBC….

“The debts that are in this country are skyrocketing,” he said. “In the last three years the government has spent staggering amounts of money and the Federal Reserve is taking on staggering amounts of debt.

“When the problems arise next time…what are they going to do? They can’t quadruple the debt again. They cannot print that much more money. It’s gonna be worse the next time around.”

Jim Rogers is right about that.

The next time we see a collapse on the scale of 2008 it is going to be a much bigger mess.

Global financial markets are extremely vulnerable right now and there are a whole host of potential “tipping points” which could push them over the edge.

The Federal Reserve and the U.S. government more or less used up all of their ammunition on the 2008 crisis.

If we see another collapse in 2011 or 2012 there is not going to be much of a safety net available.

The entire world financial system is simply swamped with way too much debt. The world has never seen anything even remotely close to the gigantic mountains of debt that have been accumulated around the world today.

The current global financial system is not sustainable. More crashes are inevitable. A lot of people are going to get steamrolled.

Hopefully you will not be one of them

Read more here:
The Next Crash Could Be Alot Worse




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Wall Street Is Already Reacting Negatively To Debt Ceiling Fight

June 7th, 2011

SmartStops reminds everyone that you can benefit by sidestepping periods of risk. The low trading costs in today’s environment warrant the ROI for taking action.

Authored by Stan Collender of CapitalGains & Games blog. Posted at: http://capitalgainsandgames.com/blog/stan-collender/2264/wall-street-already-reacting-negatively-debt-ceiling-fight

Contrary to what the GOP has been saying, financial markets not only will react negatively to the debt ceiling fight happening on Capital Hill, but as I explain in my column from today’s Roll Call, that negative reaction has already begun and it’s not at all ambiguous or tepid.
 
 Negative Market Reaction to Debt Ceiling Fight

Three things are wrong with the continuing insistence by the Republican Congressional leadership and a number of potential GOP presidential candidates that the financial markets will not react negatively if the existing federal debt ceiling is not increased by Aug. 2, the date that the U.S. Treasury says the government’s cash situation will become critical.

First, it’s not at all clear that GOP Congressional leaders really believe what they are saying. One of the back stories to last week’s scam of a debate in the House on a “clean” debt ceiling bill was that the leadership apparently went out of its way to let the financial world know in advance that the vote was nothing more than political theater and shouldn’t be taken seriously. That’s the Washington version of the hedging that’s typical on Wall Street. It’s also ample evidence that the leadership was worried enough about a negative reaction from investors that it needed to reassure them in advance about what was happening and what it meant. That’s not a vote of confidence in the hold-the-debt-ceiling-hostage strategy that we keep being told will not have a negative impact on interest rates, market psychology, stock prices or economic growth.

Second, the leadership and the candidates don’t seem to realize or be able to admit that the White House is in control of many of the levers that will affect the markets. Administration officials, not the Congressional leadership, will determine how to deal with a cash shortage, and Wall Street is much more likely to react to the Treasury’s decisions than to political hyperbole, demagoguery and attempted spin. Try to imagine the virtually immediate impact on the stock price of government contractors if the administration announces on Aug. 2 that money owed to those companies will be paid after 120 days instead of 30, and you start to get a sense of how much the White House rather than Congressional Republicans are in control of the situation.

Third, in spite of all the GOP protestations to the contrary, there are actually a number of important signs that capital markets have already begun to react disapprovingly to the debt ceiling impasse and that the economy is starting to feel the negative effects.

It started in mid-April when Standard & Poor’s, one of the top three credit rating agencies, revised its outlook on the rating for U.S. debt to “negative.” Much of the reporting about S&P’s changed outlook was about the size of the deficit, but a closer look shows that S&P expressed little doubt about the United States’ ability to pay its debts. Its main concern was over the government’s “willingness to pay,” or its ability to reach the political consensus needed to make timely payments. The fight over increasing the debt ceiling, which raises questions about the government’s willingness to pay existing obligations, had to weigh heavily on S&P’s analysis, especially because the United States is having no problem borrowing and could easily meet its obligations by doing so.

The negative market reaction continued last week when Moody’s, another of the three top rating agencies, warned it was considering a downgrade of the federal government’s credit rating. Moody’s explicitly blamed the debt ceiling fight: The rating agency said the nation’s rating could be lowered if the debt ceiling is not raised “in coming weeks,” and it cited “the heightened polarization over the debt limit” as one of the primary reasons for its thinking.

In other words, and completely contrary to what GOP leaders are saying, two major financial market participants are warning that there will be a Wall Street-related price to pay if the debt ceiling is not raised as needed.

The best indication of all that the market has already started reacting negatively is the current trading of credit default swaps on U.S. debt. As of late May, the number of CDS contracts — essentially insurance policies on the possibility of a default — had risen by 82 percent. Equally as important, the cost of a CDS — the best indication of how much riskier U.S. debt has become — rose by more than 35 percent from April to May. Last week I spoke to a number of people who calculate such things for a living, and they said this change means that the interest rate the U.S. government has to pay has already increased by as much as 40 basis points compared with what it otherwise would be. This means higher federal borrowing costs and deficits, and overall higher interest rates on everything from car loans to mortgages to credit cards.

Except when something unexpected occurs, the initial changes in market psychology and behavior start with just a few investors who act either because they are more or less risk averse, have better information, or are smarter. That means there are usually small signs of change before a market tsunami hits. In this case, there is now clear evidence that the uncertainty over the federal debt ceiling is already having the negative impact on financial markets that the Republican leadership has said will not occur. Just because it may not yet be obvious to everyone doesn’t mean it’s not happening.

Read more here:
Wall Street Is Already Reacting Negatively To Debt Ceiling Fight




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Gold and Silver Part Ways?

June 3rd, 2011

By Raghu Gullapalli, contributing writer

GLD SLV

 Just this morning an absolutely abysmal jobs report was released. This latest news on top of the steady stream of poor economic reports over the past week will no doubt conspire to push the market down. The S&P 500 is down to 1,300 levels and may well seek out the long-term support at 1,250. And on top of all this domestic turbulence, lies the desperate situation in the Eurozone and their dealings with the PIIGS; Portugal, Ireland, Italy, Greece and Spain.

 Economists of all stripes are talking about a double dip recession and under those circumstances you would think there would be a flight to the security of precious metals. While recent increases in margin requirements may reduced the fervor for such investments than in recent months, it will not completely dampen the enthusiasm of many for Exchange Traded Funds (ETF) that can be erstwhile proxies. After all in the midst of all this new terrible news, what is the dollar doing? Tanking!

Much of the speculation has been shaken out of the Silver trade, especially after the dramatic 30% pullback from its all time highs in the first two weeks of May. Despite these more reasonable prices, and its recent range bound state, there has been little or no appetite for Silver.  iShares Silver Trust (SLV) is continuing to trade below its 55 day moving average but comfortably above the 210 day moving average.  Smartstops has the short-term stop at $33.09  and the long-term stop at $32.58

ETF, Uncategorized

Elevating Risk Management

May 28th, 2011

We couldn’t agree with some of the commentary from this article in  Financial Advisor Magazine.  Its why we created SmartStops.   

The broader message is that indexing is moving past the standard beta carve-ups, such as small- vs. large-cap equities and value vs. growth stocks. A new era of factor-based indexing is dawning… Among the catalysts for the new indices is the growing use of factor models, says Rolf Agather, director of index research at Russell. “As investors become more sophisticated, they’re using risk factor models to have a better understanding of their risk exposures.”   Elevating risk management to a high priority, in other words, is the new new thing.   “Many investors are realizing that using a traditional framework built around countries, sectors or styles doesn’t always provide the insights for appropriately managing risk,” he explained in an e-mail. “Investors are looking for new ways to manage their risks more directly.”

Beyond One Beta

A key motivation for targeting multiple risk factors in portfolio design is recognizing the limits of using just one.

The broad market beta does the heavy lifting for explaining the link between risk and return, according to the capital asset pricing model (CAPM). (CAPM is Robert Merton’s invention) .   But if CAPM worked as promised, one beta would suffice for explaining risk and return. More exposure to market beta would bring higher return; less exposure would mean lower return.

CAPM’s embedded message: Don’t waste your time with factors other than market beta. It’s an elegant story, and it simplifies portfolio design and management—if it works.  But it doesn’t, at least not completely

Even if you have the stomach for sitting tight over ten or 20 years, the risk and return story isn’t as simple as CAPM suggests. Decades of empirical research show that there are other risk factors beyond market beta driving performance. In fact, the risk-return story is teeming with factor narratives. The concept of one dominant beta isn’t dead, but it’s no longer alone.

Read more here:
Elevating Risk Management




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Uncategorized

Elevating Risk Management

May 28th, 2011

We couldn’t agree with some of the commentary from this article in  Financial Advisor Magazine.  Its why we created SmartStops.   

The broader message is that indexing is moving past the standard beta carve-ups, such as small- vs. large-cap equities and value vs. growth stocks. A new era of factor-based indexing is dawning… Among the catalysts for the new indices is the growing use of factor models, says Rolf Agather, director of index research at Russell. “As investors become more sophisticated, they’re using risk factor models to have a better understanding of their risk exposures.”   Elevating risk management to a high priority, in other words, is the new new thing.   “Many investors are realizing that using a traditional framework built around countries, sectors or styles doesn’t always provide the insights for appropriately managing risk,” he explained in an e-mail. “Investors are looking for new ways to manage their risks more directly.”

Beyond One Beta

A key motivation for targeting multiple risk factors in portfolio design is recognizing the limits of using just one.

The broad market beta does the heavy lifting for explaining the link between risk and return, according to the capital asset pricing model (CAPM). (CAPM is Robert Merton’s invention) .   But if CAPM worked as promised, one beta would suffice for explaining risk and return. More exposure to market beta would bring higher return; less exposure would mean lower return.

CAPM’s embedded message: Don’t waste your time with factors other than market beta. It’s an elegant story, and it simplifies portfolio design and management—if it works.  But it doesn’t, at least not completely

Even if you have the stomach for sitting tight over ten or 20 years, the risk and return story isn’t as simple as CAPM suggests. Decades of empirical research show that there are other risk factors beyond market beta driving performance. In fact, the risk-return story is teeming with factor narratives. The concept of one dominant beta isn’t dead, but it’s no longer alone.

Read more here:
Elevating Risk Management




HERE IS YOUR FOOTER

Uncategorized

Amazon in Solid Growth Trend With E-Book Business

May 27th, 2011

originally posted at Minyanville 

by  Tony Daltorio. contributing writer

Amazon says it is selling more e-books for its Kindle electronic reading device than paperback and hardback editions combined.

If you would have told any book lover a few years ago that electronic books were poised to surge in popularity and overtake traditional books, you would have been scoffed at and drawn more than a few stares.But here we are a few years later. The Association of American Publishers recently reported that US e-book revenues had grown 146 percent in March over the same month a year ago.Figures for March showed e-book revenues of $69 million. This trailed only adult paperbacks, which were down 8 percent at $116 million, and adult hardbacks, up 6 percent at $96.6 million.

So it should come as no great surprise to investors that Amazon.com (AMZN) is at the forefront of the trend toward e-books. The company began as an online seller of printed books in 1995 and launched the Kindle e-reader in November 2007.

Amazon’s Growth

Amazon said it is selling more e-books for its Kindle electronic reading device than paperback and hardback print editions combined. It now sells 105 electronic books for every 100 printed ones. Amazon’s founder and CEO Jeff Bezos commented, “We had high hopes that this would happen eventually, but we never imagined it would happen this quickly.”

This is a trend which has been in place for roughly the last year now. Sales of e-books surpassed hardcover titles in July 2010 and overtook paperbacks six months later. And now its bested both categories combined!

A real positive is the fact that Amazon stated that this trend helped its book business do its strongest growth in more than a decade.

Amazon only released unit sales data rather than comparable revenue figures, and Kindle editions typically sell for lower prices than print titles.

However, the data did suggest that Amazon might be extending its leading market share in e-books. This follows the release six weeks ago of a cut-price Kindle at $114 for US customers willing to accept sponsored screen savers and other advertising.

Publishers, who gathered this week at the annual Book Expo America in New York, think that this trend toward e-books will continue. They believe Amazon and other e-book sellers are likely to benefit from the trouble afflicting Borders and other brick-and-mortar book sellers. Borders filed for Chapter 11 bankruptcy protection in February.

If you decide to make an investment in Amazon, be sure you have sufficiently evaluated the risk for your investment. Even though Amazon looks to be in a solid growth trend with its e-books business, it’s important to maintain an intelligent risk strategy to earn higher returns.

Buy and protect — it’s the smart way of investing.

Read more here:
Amazon in Solid Growth Trend With E-Book Business




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Uncategorized

Amazon in Solid Growth Trend With E-Book Business

May 27th, 2011

originally posted at Minyanville 

by  Tony Daltorio. contributing writer

Amazon says it is selling more e-books for its Kindle electronic reading device than paperback and hardback editions combined.

If you would have told any book lover a few years ago that electronic books were poised to surge in popularity and overtake traditional books, you would have been scoffed at and drawn more than a few stares.But here we are a few years later. The Association of American Publishers recently reported that US e-book revenues had grown 146 percent in March over the same month a year ago.Figures for March showed e-book revenues of $69 million. This trailed only adult paperbacks, which were down 8 percent at $116 million, and adult hardbacks, up 6 percent at $96.6 million.

So it should come as no great surprise to investors that Amazon.com (AMZN) is at the forefront of the trend toward e-books. The company began as an online seller of printed books in 1995 and launched the Kindle e-reader in November 2007.

Amazon’s Growth

Amazon said it is selling more e-books for its Kindle electronic reading device than paperback and hardback print editions combined. It now sells 105 electronic books for every 100 printed ones. Amazon’s founder and CEO Jeff Bezos commented, “We had high hopes that this would happen eventually, but we never imagined it would happen this quickly.”

This is a trend which has been in place for roughly the last year now. Sales of e-books surpassed hardcover titles in July 2010 and overtook paperbacks six months later. And now its bested both categories combined!

A real positive is the fact that Amazon stated that this trend helped its book business do its strongest growth in more than a decade.

Amazon only released unit sales data rather than comparable revenue figures, and Kindle editions typically sell for lower prices than print titles.

However, the data did suggest that Amazon might be extending its leading market share in e-books. This follows the release six weeks ago of a cut-price Kindle at $114 for US customers willing to accept sponsored screen savers and other advertising.

Publishers, who gathered this week at the annual Book Expo America in New York, think that this trend toward e-books will continue. They believe Amazon and other e-book sellers are likely to benefit from the trouble afflicting Borders and other brick-and-mortar book sellers. Borders filed for Chapter 11 bankruptcy protection in February.

If you decide to make an investment in Amazon, be sure you have sufficiently evaluated the risk for your investment. Even though Amazon looks to be in a solid growth trend with its e-books business, it’s important to maintain an intelligent risk strategy to earn higher returns.

Buy and protect — it’s the smart way of investing.

Read more here:
Amazon in Solid Growth Trend With E-Book Business




HERE IS YOUR FOOTER

Uncategorized

ETF Market is Risky – Protection is Needed!

May 25th, 2011

Exchange-traded funds are developing in a similar way to the shadow banking system that almost brought down the world’s financial system in 2008, according to Terry Smith, chief executive officer of Tullett Prebon Plc. (TLPR)

Without owning the underlying assets, ETFs can move in the opposite way to which investors expect, Smith said

“The drivers and implications of the recent wave of financial innovation in ETF markets warrants closer surveillance of potential vulnerabilities by financial stability authorities to ensure that the market grows in a sustainable and safe way,” the FSB said.

ETFs are also vulnerable to unlimited short-selling because of the ease of creating new shares, according to Smith, who said short-selling in some funds has reached 1,000 percent. “The scope for a short squeeze is tremendous,” he said.

from post at: http://www.bloomberg.com/news/2011-05-24/etfs-are-becoming-a-shadow-banking-system-tullett-s-smith-says.html

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ETF Market is Risky – Protection is Needed!




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ETF, Uncategorized

Health Care Correction in the Works?

May 24th, 2011

By Raghu Gullapalli, contributing writer , SmartStops.net

XLP, XLU, XLV

 Yesterday, by closing at S&P 1,317 we finally pushed through three key supports – the 55 day moving average, the support level at S&P 1,330, and last week’s lows at S&P 1,318.50. I think these support breaks open the door for a test of the market’s weekly uptrend lines sitting around S&P 1,280.  And many technicians agree once the S&P breaches 1,300, the next stop will be the March lows of S&P 1,250.

Contrary to the action in the broader market, the Consumer Staples Select Sector SPDR (XLP), Utilities Select Sector SPDR (XLU) and Health Care Select Sector SPDR (XLV), have all been in a strong uptrend. These up trends have been challenged and these Sector ETFs may soon come in line with the broader market.

The Consumer Staples Select Sector SPDR (XLP) is still trading well above its 55 day moving average but is now being supported by the 21 day moving average. Given the price action the prior two sessions, it would be prudent to be aware of the risk of entering a new position at this juncture. Smartstops.net has the short-term stop at $31.60 and the long-term stop at $31.13

The Utilities Select Sector SPDR (XLU) has begun to pullback as well. Now being supported by its 21 day moving average. And unless this pullback is a period of rest before the sectors continued push upwards, it will more likely cut through both the 21day and 55 day moving averages. SmartStops.net has the short-term stop at $33.18 and the long term-stop at $31.77

The Health Care Select Sector SPDR (XLV) which has been darling of the talking heads on CNBC is now facing a similar challenge to its strong up trend. This mornings poor earnings from Medtronic (MDT) cannot have helped the sectors drive up. The correction look like it is beginning to gain momentum, now that the ETF is trading below its 21day moving average. SmartStops.net has the short-term stop at $35.23 and the  long–term stop at $34.46

Read more here:
Health Care Correction in the Works?




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ETF, Uncategorized

Crushed by Cotton

May 23rd, 2011

By Raghu Gullapalli, contributing writer, SmartStops.net

Last week was very rocky for clothing retailers, Ralph Lauren, Aeropostale and almost cataclysmic for the Gap.

The Gap (GPS), which is the 800 pound gorilla in the clothing retail space, presented poor earnings and cut its outlook for the rest of the year. During their conference call, it became clear that the retailer has been having a hard time managing the margin squeeze caused by the spike in
commodity prices, particularly cotton. In addition the company experienced weaker sales, which has been only exacerbated by the high cost of oil. The stock traded down $4.07 to $19.22. The stock is trading below its 55 and 210 day moving averages and it is unlikely to break this new downtrend without a significant catalyst from the larger markets. The Smartstops.net short-term stop is at $18.61 and the long-term stop is at $17.84.

News of the Gap, was compounded by the poor results of Aeropostale (ARO). The teen retailer’s guidance for the quarter fell well short of market expectations amid dropping sales and the afore mentioned rise in rawmaterial costs. On Friday ARO was down $3.04 at $18.30. It is well below its 55 and 210 day moving averages. And will more than likely need a significant market catalyst for that to change in the near term. Smartstops.net has the short-term stop at $16.40 and the long-term stop is at $15.68

This news created waves in the market as other apparel companies, also affected by the same rise in cotton prices saw their stock plummet as much as 5%. Polo Ralph Lauren (RL) which has earnings on May 25th  dropped precipitously, but is being supported above its 55day moving average.  SmartStops has the short-term stop at $126.17 and the long-term stop at $123.51.

Fortunately this news has not caused the SPDR S&P Retail ETF (XRT), to weaken significantly. It is still being supported by the 55 day moving average and is well above its 210 day moving average. SmartStops has the short-term stop of the ETF at $51.60 and the long-term stop at $50.74

Read more here:
Crushed by Cotton




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ETF, Uncategorized

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