An ETF with a profitable strategy & the parabolic move ($SPY $GLD $GC_F $ES_F $FSG $SPX500 #ETF #hedgefunds)

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Another good source for a brief review of the week´s main events is posted at the end of each week by Ritholtz blog, The Big Picture.

Just one relationship to resume the last few days:

In gold terms, S&P’s retest March ’09 low of 666

 

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Furthermore, if you are looking to play this, it is a good idea to check out FSG, As Investors´s Business Daily points out

Fsg2

An ETF that buys gold while shorting the market shined this week. The FactorShares 2x Gold Bull S&P 500 ETF (FSG) vaulted 23% in massive volume this week, while the global markets sold off. That’s on top of an 11% gain the prior week.

FSG uses a strategy that’s commonly used by hedge funds and other professional traders. It offers 200% exposure to gold futures and 200% short exposure to S&P 500 futures. It resets daily, so returns over the long term may not correspond with the actual spread between gold and the S&P 500.

“FactorShares 2X: Gold Bull/S&P500 Bear is a one-of-a-kind way to take advantage of gold’s upside, while hedging exposure to U.S. stocks,” said Stuart Rosenthal, CEO of Factor Advisers, the fund’s sponsor. “Consider FSG if you believe gold will continue to outshine U.S. stocks.”

In the past week, SPDR Gold Trust (GLD) ticked up 2.33%, while the SPDR S&P 500 plunged 7.9%. Gold has outpaced the market this year by a wide swath. GLD returned 17%, while the S&P lost 6% so far this year. GLD returned 37% in the past 12 months, while the S&P returned 6%. People buy gold as a safe haven and store of value when investing in stocks becomes too risky.

 

Can it go higher? It might, you never know. Most likely, in the event market keeps momentum in their opening direction (ES@-24 pts/-2% and GC@+35 pts./+2%, at the time of writing) it would porbably gap. However, when I see this type of move, silver´s meteoric rise -only to reatrace it with 25% shortly thereafter- early this year comes into mind. It is very difficult -and not worthy, IMO- to look for tops or bottoms, although sometimes I cannot help miself to look for them, I admit it.

It is wise to note, that usually in parabolic moves, the 8 day SMA tends to work well. Here are the two charts to have in mind

Slv2
Fsg2

NOTE: I have not checked the ETF´s prospectus. which you can find here. It is important to review and understand the risks involved before making any decisions on regards to it.

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