Stockchase Opinions

Steven Conville HBP S&P/TSX 60 Bear+ ETF HXD-T PAST TOP PICK Jun 21, 2010

(A Top Pick Dec 18/09. Down 11.71%.)
$11.530

Stock price when the opinion was issued

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TOP PICK
S&P/TSX 60 Bear+ ETF. Would encourage investors to use a small portion of their portfolio to get a little bit of defensive protection. This is a double short so if you use 2.5% of your portfolio, it would react as if it were 5% of your portfolio. If he is wrong and the market goes roaring, the other 97.5% of your portfolio will cover it. Not a long-term hold.t
WAIT
Historically it makes sense to look for an entry point into this one, but the fundamentals don’t look right. You want to see signs that a sign that a trend is established before going in.
WEAK BUY
2 times leverage. You have to be careful in terms of how you follow it. You have to be certain it is tracking the way you want it to. Also see HYG-N, which is leveraged to Canadian dollar.
DON'T BUY
S&P/TSX 60 Bear+ ETF. Performance of this is indicating that TSX has been going the other way. Not so sure TSX is going to fall off a cliff unless something blindsides us in the next 2-3 months. Not a big fan of the double up on a short in the Canadian market.
COMMENT
Uses derivative contracts so it will suffer from tracking error relative to TSX 60 turned upside down. You could use this one effectively for some shorting of the market. If you are going to hold it, keep a careful eye on it and be ready to pull the trigger and pull out whenever it is right.
BUY
Don’t hold for a long-term. You will be burned. Great for daily or weekly trades or you will get hurt.
COMMENT

He generally doesn’t like Bull and Bear ETF’s. Doesn’t use them in his practice. These types of things are often re-priced on a daily basis so you need to watch them very, very closely.

WAIT

The Canadian market reaches a double peak around the end of the second week in July. Within the next 2 or 3 weeks you will see this one do very well.

DON'T BUY
Some of these leveraging ETFs can work for you if you get a change of direction but you have to be a surgeon in terms of using them. We are eventually going to get a rally of 10% for a day or two. But the day to day volatility can significantly erode the performance of these leveraged ETFs.