Online Trading Blog

Exchange Traded Funds (ETFs) themselves has great variety and diversity. They can be classified on many basis such as index they following, their management, asset allocation, etc. Here are some popular ETF types.

1. Broad Index ETFs – These are the most diversified ETFs with respect to their composition. Examples include ETFs tracking S&P 500, NYSE, AMEX, etc. One can also find broad index ETFs which track international indexes like Japan Nikkie. Symbols include SPY, DIA and QQQQ.
2. Market sector ETFs – These are ETFs tracking specific market sectors like finance, technology, industrial, etc. They are less diversified compared to broad index ETFs but are also very liquid. Symbols begin with AX.
3. Business sector ETFs – These ETFs track specific segments like biotechnology, medical services, utilities, semiconductors, etc. They are less liquid than market sector ETFs.
4. International Regional ETFs – These are ETFs which track indexes of specific regions like Asian, European and Latin American markets. There are also ETFs which has mix of regions like Asian-European mix ETFs and Emerging market ETFs.
5. Country specific ETFs – These are ETFs having a portfolio comprised of large cap stocks of a stock market of a specific country; often a developed or emerging country like Canada, China, Brazil or India.
6. Commodity Specific ETFs – These are ETFs which track either specific commodities or stock of companies related to a commodity. Some popular examples are gold ETFs, grain ETFs, and financial commodity ETFs.
7. Currency specific ETFs – These are ETFs which track one or more currencies or track the price differences of currency pairs. Example include ETFs which track G8 currencies. Currency ETFs tend to be more liquid than stock ETFs.
8. Smart of Leveraged ETFs – These are ETFs which implement some sophisticated trading strategies to magnify the returns from the market. They tend to be more risky and costly than traditional ETFs.
9. Bond ETFs – These are ETFs which track fixed-income securities like treasury and corporate bonds. They tend to be of 'low-risk low-return' nature.
10. Entire World ETFs – These are ETFs which track most of the world markets. Vanguard Total Market Index Viper is a good example.

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The Week Ahead: The sharp rise in personal savings has the stock market fearing consumers are socking away dollars for a long recession. The April Case-Shiller Home Price Index is released on Tuesday. The auto sales report and construction spending numbers are due by Wednesday. The employment report for the month of June will be reported a day earlier than normal on Thursday due to the markets being closed on Friday ahead of the July 4th holiday.

Stocks to Watch: Specialty retailer Chicos Fas Inc. (CHS) may have ended a long but substantial rise in its equity value from last November as the company gave a guarded outlook at an analyst meeting. Sanofi-Aventis (SNY) stock continued a steep sell off after concerns about the safety of its diabetes drug Lantus and its possible link to cancer. Robbins & Myers (RBN) stock fell after Q3 earnings were substantially lower than year ago levels with a 29% drop in sales and a lowered 2009 outlook.

Special Note: One of the key statistics in confirming bull market rallies is an expansion in volume as investors gain confidence as the market advances. Conversely, what the current market is showing is a persistent contraction in volume after peaking on April 2. This loss of upside momentum is more evidence of a bear market rally that is maturing as each day passes. More over, waning upside breadth between rising versus falling share prices adds to this argument.

Commentary Provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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Ticker symbols are the identifications of companies on a exchange listed. They are not limited to stock exchanges; they are there for almost all financial instruments which are publicly traded. Ticker symbols derive their name from old noisy machines used by brokers for received buy and sell orders, which make ticking sounds.

Different exchanges have different rules for ticker symbols. While New York Stock Exchange (NYSE) has symbols with 1 to 3 characters (eg: T for AT&T and VZ for Verizon), NASDAQ has 4 or 5 letter symbols (eg: MSFT for Microsoft). It is common to have different symbols for same company stocks. Usually it is the exchange which provides a symbol (at random) to a newly listed stock, or the company can suggest the market to offer a particular symbol (which reflects their name/brand) available for its company stocks (eg: JAVA for Sun Microsystems and GOLD for Randgold Resources). Companies can also contract the exchange to change its ticker symbol if necessary.

Sometimes additional letters are added to ticker symbols of listed stocks to indicate some specific information. Nasdaq adds A and B to class A and B stocks respectively, D for new listed stocks, E if the company not filed it forms with SEC, Q if the company undergoing bankruptcy, F for foreign stocks, Y for ADRs, C for temporary qualification exceptions, etc. This helps the traders to identify the status of stocks quickly.

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Three inside down is a bearish trend-reversal pattern indicating the end of an uptrend and start of a new downtrend. It is a three candlestick pattern which is the ‘confirmation of bearish harami candlestick formation’. The first two day candlesticks of bearish three inside down pattern forms bearish harami pattern, and the third day candlesticks, which is bearish, confirms the trend change.


The requirements of a bearish three inside down pattern include,

• The pattern should form at the top of a significant uptrend.
• The first day is a bullish day characterized by a long bullish (white/colorless) candlestick indicating continuation of existing trend.
• The second day market opens a gap below first day candlestick (exception: forex) and the small real-bodied bearish (black/colored) candlestick closes with in the real-body of first day candlestick, forming the bearish harami.
• Third day is also a bearish day which closes below the real-body of first day candlestick.

The confirmation of bearish harami pattern on third day makes it clear that bears are now controlling the market and prices are expected to go down. The formation mostly occurs at mornings.

Bearish three inside down pattern is considered highly reliable. Reliability of pattern increases with increase in real-body and trading volume on day three. Because it is the confirmation of other pattern, no more confirmation is suggested.

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Displaced moving average or DMA is a very useful moving average (MA) tool, which can be adjusted both forward and backward to get specific results. DMA is created by displacing the simple moving average by a certain number of intervals; which can either positive or negative. OR DMA is created by displacing the center of the moving average to left (backward) or right (forward).

When the displaced moving average is displaced by a negative value, it becomes a lagging indicator (than original moving average) and when it is displaced by a positive value, it becomes a leading indicator. As a general rule, making DMA a lagging tool helps long-term traders to ignore excess noise (as a result of daily trading) and making DMA a leading tool helps short-term traders to find small price trends.

In displaced moving average, by displacing the center of MA, traders can reduce the noise in the moving average. Traders use displaced moving averages for various purposes.

1. Long-term traders and investors use DMA with negative values to de-trend the charts to find out market cycles.
2. Short-term traders use DMA with positive values to make it a leading indicator to find trends and trend-changes faster.
3. Traders can also use DMA to generate buy and sell signals with respect to the crossing of DMA by price trends.

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Exchange Traded Funds (ETFs) are always considered good candidates for passive investing. Their variety, portfolio diversity and low-risk nature better suited passive investors. But there are also many traders who actively traded these funds. Here is a comparison.

The major thing which makes ETFs less suitable for active trading is their trading costs. ETFs are just traded like stock and thus there are brokerage fees involved with every buying and selling activity. This can eat up the profit. Actively trading ETFs through a traditional broker, who charge high, can make the scenario worse. Active ETF investment needs, low trading costs, trending tracking market/sector, right market timing and comparatively large position sizes. The strategy better suit actively managed ETFs, which try to beat markets. Most active trading strategies followed for trading stocks, e.g.: trading on margin, sector rotation, short-selling and arbitrage, also works for ETFs.

Passive ETF investing demands the only most followed trading strategy, buy-and-hold strategy. By holding the fund shares for a long term, and also raising the amount invested, one can nullify the effect of trading costs on profits. This strategy is also good for trading traditional ETFs, which tracks the markets passively, and keep their expense ratio to lowest levels. Passive ETF investing better works when you are trading a enough diversified index showing long-term uptrend. Remember, with passive ETF investing, you are less blessed with productive strategies like trading on margin, short-selling and intraday trading.

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The Week Ahead: A long list of economic reports is slated to hit the markets starting with Tuesday's existing home sales report for May. The Federal Reserve's FOMC begins a two day meeting as well. Wednesday brings new home sales numbers and a durable goods report for May. The Federal Reserve will determine interest rate policy by afternoon. The Q1 final GDP report along with jobless claims is due by Thursday. Finally by Friday, the personal income and spending numbers come out as well as the consumer sentiment reading for June.

Stocks to Watch: Carmax Inc. (KMX) showed Q1 earnings flat year over year with a 17% drop in same store sales, but the stock managed a substantial gain on the news. Teekay Tankers (TNK) priced a 7 million share offering at $9.80 each creating a dilution possibility for existing shareholders. Sasol Limited (SSL), the world's largest producer of motor oil from coal warned that full year profits will fall 50% due to lower oil prices, and the stock reacted accordingly by falling back to its 50 day moving average.

Special Note: Some market analysts have commented that stocks have risen too far too fast and that sustained growth in the economy is needed to sustain current equity valuations. Of note recently is the noticeable increase in insider selling relative to insider buying which could be a hint as to what corporate executives feel about sustained growth going forward. The Fed's message this week is important in so far as any strong language that they intend not to raise interest rates.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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Candlesticks helps tremendously in trading of financial instruments. Their advantages include 1) pictorial representation of market movements without any necessity of serious mathematics, 2) can be used by all kinds of traders trading almost all financial instruments, 3) with their small makeup (real-body and shadows) they can carry serious trading info and 4) they are easy to use with other technical analysis tools. Here are some tips for trading with the candlesticks.

1. Success with candlesticks demands by hearting candlestick patterns. You can start remembering them from frequent formations to less frequent one.
2. Start learning from simple reversal patterns to complex patters.
3. Print 5 or 10 candlestick patterns with their key features and importance on a paper and go through them one or twice a day. You can by heart them within a week. Then next 10.
4. It is also better to hand draw patterns on a paper. This works especially good for complex patterns as our brains retain images more when our hands too involved in a process.
5. When reading charts always looks for doji and start candlesticks, as they are the candlesticks which often form specific patterns. Also look at the top of uptrends and bottom of downtrends, to find some reversal candlestick patterns.
6. Many candlestick patterns, like hammer and morning star, have names which makes them easy to identify and track.
7. Learn the confirmations of different candlestick patterns; it is easy because most bullish patterns have similar confirmations and bearish patterns just reverse.
8. Learn to use other technical analysis tools, like Fibonacci, moving averages and Gann, with candlesticks. This can help you in right market timings, and placing right stop-losses and targets.

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Bullish three inside up is a bullish trend-reversal candlestick pattern indicating the end of an existing downtrend and the start of a new uptrend. It is a three candlestick pattern, regarded as the ‘confirmation of bullish harami candlestick pattern’. This is because the first two candlestick of three inside up pattern forms the bullish harami candlestick, which is a moderately reliable bullish pattern. The third candlestick confirms the start of new uptrend.


The requirements of bullish three inside up pattern include,

• The pattern should form at the end of a bearish trend.
• The first day is a bearish day characterized by a long bearish (black or colored) candlestick.
• The second day is a bullish day, where the market opens a gap above first day candlestick and then closed within the real-body of first day candlestick; this forms the bullish harami pattern.
• The third day is also a bullish day, where the prices close above the first day candlestick.

The confirmation of bullish harami pattern on day three indicates that buyers are now taking control of the trend. Prices are now expected to go up. Three inside up pattern mainly helps day traders and other short-term traders as the pattern is frequent in the morning.

Bullish three inside up candlestick is considered as a highly reliable formation, and the reliability increases with increase in real-body and trading volume of third day. Usually no other confirmation is suggested.

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McClellan Summation Index or MSI is a market breadth indicator and is the long-term adjusted version of McClellan Oscillator. It favors intermediate to long-term traders and indicates the strength/weakness of existing trend and predicts trend reversals. McClellan summation index is derived by adding today’s McClellan oscillator value to previous days summation index.


One new method of MSI calculation is also practiced by many; in this, instead of adding today’s McClellan oscillator value, today’s summation value is directly calculated from 10% and 5% trend values. The modified formula is,


The normal range of McClellan summation index range from 2000 to 0; and 1000 is considered as neutral. Movements below zero are considered bearish and above 2000 are considered bullish. Oversold condition is identified when the index reach -1200 (some traders wait for -1500); once -1000 is reached, prices are said to be at market bottom and there is a strong change of market reversal as in the form of a new bullish trend. The historical extremes of MIS are close to 4000 and -2000.

McClellan summation index is better suited to trade broad markets and major trends on a long-term basis as a major trend last about 2 years. The indicator offer better results with used with other long-term indicators and patterns.

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The Week Ahead: The Nasdaq Composite's rise for 13 out of 14 weeks leads all major indexes from the March low. Gas prices have risen 45 straight days as the summer driving season unfolds. Tuesday the Producer Price Index, housing starts, and the industrial production numbers are released. Wednesday brings the Consumer Price Index along with the oil and gas inventory report while the jobless claims figures arrive on Thursday.

Stocks to Watch: Cabot Corp. (CBT), according to J.P. Morgan, expects to cut its annual dividend as poor market conditions persist. Volcan Materials (VMC) priced an 11.5 million share offering after cutting its quarterly dividend by .24 the day before as the stock lifted from a recent low. Alaska Air Group (ALK) announced a $50 million share buyback plan as the stock has been under performing relative to the market. Savient Pharmaceuticals (SVNT) rose over 50% on an FDA report that their gout treatment appeared effective in two recent studies.

Special Note: The Dow Industrials joined the Nasdaq Composite and S&P 500 by closing in positive territory for the year. The next step to watch for is whether the DOW can penetrate to new highs for the year above the 9088 high from January. If not a possible inter-market bearish divergence would be setting the market up for a significant reversal. Already lagging badly are the Dow Transports and Dow Utilities as both these indexes are still well off there 2009 highs.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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Exchange traded funds (ETFs) and Index funds are different types of funds with almost same type of portfolio. Both passively track broad/specific indexes/sectors and try to go with the market. But as they are managed in different ways, they offer different returns, have different risk levels and suit different traders. Here is a comparison of ETFs and index funds.

1. Both have diversified portfolios.
2. ETFs suit almost all kinds of traders, institutional and retails, following most trading styles. But they (because of the trading costs involved) are less suitable for retail traders, who want to passively track the market.
3. Index funds usually suit retail traders, having less time/resource to manage their portfolio, because it does not need a brokerage account or transaction costs.
4. Most index funds are open end funds, which work by regularly creating and redeeming shares. But ETFs are devoid of these costs. For more info read Open End Funds Vs Closed End Funds.
5. Index funds need to hold some money as cash on their hands, while ETFs can invest the full amount on stocks. This too saves cost.
6. ETFs are traded like stocks, this means there is brokerage costs (which can vary with broker) and bid-ask-spreads. This can make them costly for a less-capital investor.
7. ETFs, which lesser security transactions are more tax savvy than index funds.
8. Index funds offer more advantages for dividend-loving trades. They almost readily reinvest/distribute the dividends, where as ETFs require to gather and distribute cash to shareholders on timely manner.

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Day trading of financial instruments (stocks, options, currencies, futures…) has evolved significantly in recent years. With more young traders starting their day trading career, the number of active day traders is consistently increasing and new trading strategies and systems are coming up. Now most day traders trade to make their livelihood, rather than to maximize their portfolio. Trading for living needs some serious attention.

• Better trading education – Day trading for living means you need to make profits consistently and can’t lose much. Thus you need better trading education, especially in reading the market, position sizing and market timing.
• Better strategies and systems – You may not receive many opportunities for ‘trial-and-error learning’ with real-money in the market. Thus you need to exploit every opportunity that comes around, for that you need better plans, strategies and powerful trading systems.
• Better with your money management – Day trading, by any means, does not ensures profit. You need to manage your earning and spending inline with your trading; have to create some money backups.
• Looking for more profits can cause problems – This is one of the demerits associated with day trading for living. You can’t hold your positions for extended time as market can change dramatically. You need to have tight stop-losses.
• No other business on market-hours – Day trading demands time and dedication.

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Bullish breakaway is a market reversal candlestick pattern, indicating the end of an existing downtrend and start of a new uptrend (usually short-term reversal). It is a five candlestick pattern which first indicates the acceleration of existing downtrend, then slowing of it and finally the trend reversal.


The requirements of a bullish breakaway candlestick pattern include,

• The pattern should form at the bottom of the existing downtrend.
• The first day is a long bearish day characterized by a long black (colored) candlestick.
• The second day candlestick opens a gap below the first candlestick (except in forex charts) and closes at a new low (indicating trend acceleration). The real-body of the candlestick is smaller than first day candlestick.
• The third and fourth day candlesticks are also at the direction of existing downtrend with lower closes than previous candlestick. Third day candlestick can be bearish or bullish.
• On fifth day, there is a long bullish (white/colorless) candlestick, which closes in the gap between first and second day candlestick (except forex charts, where it can close into the real-body of first or second day candlestick).

Bullish breakaway candlestick formation occurs when bears fail to continue existing trends after the second day opening. Prices are now at oversold conditions and the trend is getting weaker and weaker, indicated by small real-bodies of second to fourth candlesticks. The first day marks the market reversal; which is expected to continue as the gap created is not filled.

Bullish breakaway candlestick pattern is a moderately reliable candlestick pattern. Reliability can increase with increase in gap, shortening of real-bodies of middle day candlesticks and with increase in trading volume on fifth day. Confirmation of trend reversal can be a gap up, a higher close or a bullish candlestick on sixth day.

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McClellan oscillator is an important indicator which evaluates the market breadth or difference between advancing and declining stocks of NYSE and indicates trend changes. It was developed by Sherman and Marian McClellan in 1969. McClellan oscillator is mainly used by intermediate traders and also used by short-term traders especially when it indicates overbought and oversold conditions.

By definition McClellan oscillator is the numerical difference between 10% trend and 5% trend or between 19-day and 39-day Exponential Moving Averages (EMA). EMAs of the difference between total advancing stocks and total declining stocks of the day (or is the Daily Advance Decline Line) is used. So the simplified formula is,


Basic idea behind McClellan oscillator is that a trend is bullish or bearish when most number of stocks participates in it. A small number of stocks making large gains (in a bullish trend) or losses (in a bearish trend) indicate that the trend is weakening. Thus analyzing of market breadth can indicate trend strength and changes.

McClellan oscillator offers mainly two types of interpretations. First, Positive values of the oscillator represent money coming into the market (bullish activities) and negative values represent money going out of the market (bearish activity); and the magnitude of the oscillator is the indicator of how much money is coming in/going out. Second, overbought and oversold conditions are identified when McClellan oscillator is in extremes (beyond 100 in either direction).

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Exchange Traded Funds (ETFs) are often compared against mutual funds and similar funds, not against stocks and other exchange traded products. ETFs also have some advantages over stocks and thus are handy instruments to include in your portfolio.

• No need to screen for individual stocks – perhaps the most difficult task in stock trading is stock screening. ETFs let you to trade particular industry/market/sector as a whole (or with preferences) rather than screening 5 or 10 good companies in that sector.
• Less price fluctuations and surprises – The major risk associated with trading individual stocks is surprising price fluctuations. But ETFs tracks more than a handful of stocks and thus are more liquid and less susceptible for rapid fluctuations.
• Traders can easily go long or short – ETFs comes with less restrictions. Traders can go short whenever they want. Actually, ETFs are also very good instruments to test your short trading skills.
• ETFs help you to control a diversified portfolio – With a lesser amount of investment in ETFs you can get control a portion of diversified ETF portfolio. Moreover ETFS also helps you in investing your money in market/sectors which are otherwise difficult to trade.

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The Week Ahead: Unemployment reached a 26 year high to 9.4% while the Dow and S&P 500 hit 11 out of 13 weeks to the upside. Wholesale trade inventories will be announced on Tuesday. Trade balance figures and the Federal Reserve Beige Book of economic activity is released Wednesday. Retail sales and business inventories is due by Thursday while import price data and the University of Michigan's Confidence Index comes out Friday.

Stocks to Watch: The shares of Jackson Hewitt (JTX) have more than doubled since March after the former head of H&R Block was named the CEO. Rio Tinto (RTP) cancelled the Chinalco deal and launched an iron-ore joint venture with BHP Billiton (BBL) instead, but will need to sell 15 billion in common stock to slash debt. The FDA approved the over-the counter use of Palomar Medical Technologies' (PMTI) home wrinkle removal laser which could add $12-40 million in annual revenues.

Special Note: Two changes to the Dow Jones Industrial Average will take place on Monday. Cisco Systems (CSCO) replaces shares of General Motors which increases the technology weighting to 18.4% for the Dow. Travelers Companies (TRV), the property and casualty insurer will replace CitiGroup (C ) which was its former parent company. It is hoped these two replacements will help stabilize the price volatility of the Dow but only time will tell.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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Many experts say that the market works in cycles and thus can predict future trends by analyzing historic market data. While the first saying often found correct the second one is always challenged. Many traders, says that we can’t read/predict market trends based on historic market movements and performances. There are many reasons for this.

1. Ten or twenty years before there are not so much technology-based or technology-driven companies as now.
2. New trading instruments like exchange traded funds (ETFs) and other funds, and complex option trading strategies are not much popular before.
3. There was lesser number of day traders than now, who by virtue of their number and trading volume can control/enhance intraday and daily price trends.
4. Traders as a whole was not supplied with advanced trading systems loaded with customizable charting and plenty of indicators.
5. No high amount of investor money was invested in pension funds and mutual funds as today.
6. There was no much correlation/co-ordination of domestic and foreign markets, and also of stock, commodity and forex markets.

But still, we can drive some vague conclusions based on historic market performances. We today have got great research tools and indicators to analyze and confirm our conclusions. Making use of them in the right way together with strict trading strategies can help to maximize profit and to minimize risks.

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Bearish breakaway is a bearish trend reversal pattern indicating the end of the existing bullish trend and the start of a new bearish trend (usually for a short-term). It is a 5 candlestick pattern which first indicates the acceleration of current trend, then weakening of the same and finally trend reversal.


The requirements of a bearish breakaway candlestick pattern include,

• The pattern should form in a significant uptrend.
• The first day is characterized by a long bullish (white or colorless) candlestick.
• The second day opens a gap above the first day candlestick (exception: forex charts), marking the acceleration of the trend. But the real-body of the candlestick is smaller than that of first day’s.
• The third and fourth candlesticks are also in the same direction of existing bullish trend with higher closes than previous candlesticks. These candlesticks can be bullish or bearish.
• At fifth trading day, there is a long bearish (black or colored) candlestick which closes in the gap between first and second day candlestick (exception: forex charts; where it should close below second/third day candlestick).

Bearish breakaway candlestick pattern occurs when the bulls fails to continue the trend after the second days opening. The small real-bodies of second, third and fourth days indicate the trend is weakening and the fifth day confirms it. Prices are expected to fall as still the gap is not yet filled.

Bearish breakaway is a moderately reliable candlestick formation. Reliability increases with increase in gap, shortening of real-bodies and trading volume of middle candlesticks, and with increase in volume of fifth bearish candlestick. Confirmation includes a bearish candlestick, a lower close or gap down on six day. Note: The first three days of bearish breakaway candlestick resembles bearish advance block pattern. Bearish advance block is a less reliable pattern and thus traders have to wait for additional confirmation.

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Mass Index is a major indicator of trend reversals developed by Donald Dorsey. It tries to predict trend reversals by calculating the widening and shortening of the daily high-low range. Mass index is an important indicator because it often gives right predictions and works when other indicators miss.

By definition mass index is a 25-day moving sum of two 9-day exponential moving averages (EMAs). First is the 9-day EMA of difference between the high and low prices of a day. Second is the 9-day EMA of first EMA. To calculate mass index first EMA is divided by second EMA and the result is added to the number of periods of the mass index (typically 25-days). In short mass index rises when the difference between high and low prices increases and falls when the same decreases.

With Mass index, the most important pattern to look for is the ‘Reversal Bulge’. A reverse bulge occurs when the 25-day mass index ascends above 27 (set up line) and then descends below 26.5 (trigger line). This indicates a near reversal in current price trend. But mass index does not give any bullish or bearish signals. To overcome this, most traders use a 9-day EMA of closing prices. Buy signals are generated when 9-day EMA points downward at a reversal bulge and sell signals are generated when 9-day EMA points upward at a reversal bulge.

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One of the major advantages of Exchange Traded Funds (ETFs) is that they have great diversity and flexibility to suit almost all trading/investing styles. ETFs also can be day traded; because they are traded just like stocks. But are ETFs suitable for day trading? Here are some things which should be considered.

• In general, ETFs are diversified trading instruments which track specific indexes/sectors. This makes them less risky; but this also makes them less responsive to trends. Thus it is better to day trade stocks than trading ETFs which track them.
• Day trading ETFs is a great way to begin your day trading career and to get experienced to the daily volatility of market. Once you understand the trends and test your strategies you can begin to trade the stocks.
• ETFs do not demand much stock screening ability. Thus (beginner) traders can day trade by tracking particular industries/sectors as a whole rather than screening for particular stocks. More over if some of stocks of a sector moves opposite to your position, you can still make some profit.
• There are some ETFs known as smart ETFs and leveraged ETFs which try to beat the market. They can magnify (double or triple) any trend in tracking index. Thus these ETFs are ideal candidates for day trading.

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The Week Ahead: The S&P 500 closed its 10th week out of 12 on the upside as the month of June begins. A noon news conference on Monday in New York City is expected for General Motors to announce a chapter 11 filing. Personal income and spending, construction spending, and the ISM Manufacturing Index are also due Monday. Auto sales and pending home sales numbers are released on Tuesday while factory orders and the ISM Non Manufacturing Index are due Wednesday. Chain store sales figures are out on Thursday. The widely anticipated Employment Report comes out Friday.

Stocks to Watch: Lexmark International (LXK) shares lifted from an oversold area after an upgrade from Barclays. Rostelecom ADR (ROS) continued a steep decline on uncertainty regarding the Russian Government reorganizing that nations telecom sector. SmartHeat Inc. (HEAT), a Chinese company that makes heat exchange systems for China's industrial sector rose on a price target increase to $8-$10 by Rodman and Renshaw after going public last September.


Special Note: As General Motors barrels towards bankruptcy, debate over its replacement in the Dow Industrials begins as it no longer qualifies for inclusion. The FDIC will charge banks a special fee to help restore its insurance fund, and said fee may increase over time as many banks are expected to fail over the coming year. S&P 500 earnings estimates are expected to be $56 a share over the next year but the trend of estimates has been going down.

Commentary provided by Barry Ward, Registered Principal, NobleTrading.com, Inc.

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