Which ETF Has a 100% Track Record?

Last week I asked the question “What Would You Do?” If you were an institutional trader or professional advisor, would you take the risk to make any further gains this year? Earlier this month the Dow Jones Industrial Average, the S&P 500, the Russell 2000, and the NASDAQ Composite set lower highs after failing to break above resistance.

But what if you answered “Yes”? You believe a rally through the end of the year is possible, and as soon as a rebound starts, you want to go for additional gains. How would you do it?

You could consider individual stocks, but you would have to be very selective right now. Many big-name stocks are down significantly and still showing signs of distribution. You would really have to do your homework to find the right trade candidates.

But what if you just wanted to trade an index ETF? The gains, if you were right, would probably be lower, but the odds of success would probably be higher, as you wouldn't have the risk of one or two bad stock picks significantly affecting your returns. What major index ETF would be the best one to take a chance on?

Here we with about 7 weeks left in the year. Would we consider taking a chance on the small caps?

IWM, the ETF based on the Russell 2000, has had only one losing year (15 years ago) over the next 6 to 7 weeks, and has averaged a 4.0% gain:

So maybe technology leads year-end rallies. But the QQQ, the ETF based on the NASDAQ Composite, has averaged only a 3.6% gain over the next 7 weeks, with gains in just 64% of the years:

Well maybe it is the overall market that will provide the safest bet, so let's look at SPY, the ETF based on the S&P 500. But SPY has averaged only a 2.6% gain through the end of the year, with gains in only 4 out of 5 years:

Alas, it is the unexpected Dow Jones Industrial Average that provides the best bet. Over the next 6 weeks, DIA, the ETF based on the DJIA, has gains an average 2.7%, but it has a 100% track record:

If you are curious about the 7 week return, to compare apples-to-apples, DIA has averaged a 2.7% gain, but 2002 produced a -2.6% return instead of a 0.2% gain over the 6-week period, so it has an 88% track record.

As I write this at 5 hours before Monday's start of trading in the U.S. markets, Asian and European stocks are down. DIA is currently down almost 1% in premarket trading. The U.S. may be due for another down day. But if we get a good reversal day this week in the markets, and you feel an urge to take a chance on a major index ETF, DIA, a bet on the basic Dow Industrials, would be your best bet based on history.

And any rebound in DIA would likely cause Implied Volatilites to drop. Options on DIA may be relatively cheap as DIA's IV would be close to 12-month lows:

Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day.  To find out more, please click on the following link: www.markettamer.com/seasonal

By Gregg Harris, MarketTamer Chief Technical Strategist

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Gregg Harris is the Chief Technical Strategist at MarketTamer.com.

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MarketTamer is not an investment advisor and is not registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory Authority. Further, owners, employees, agents or representatives of MarketTamer are not acting as investment advisors and might not be registered with the U.S. Securities and Exchange Commission or the Financial Industry Regulatory.


This company makes no representations or warranties concerning the products, practices or procedures of any company or entity mentioned or recommended in this email, and makes no representations or warranties concerning said company or entity’s compliance with applicable laws and regulations, including, but not limited to, regulations promulgated by the SEC or the CFTC. The sender of this email may receive a portion of the proceeds from the sale of any products or services offered by a company or entity mentioned or recommended in this email. The recipient of this email assumes responsibility for conducting its own due diligence on the aforementioned company or entity and assumes full responsibility, and releases the sender from liability, for any purchase or order made from any company or entity mentioned or recommended in this email.


The content on any of MarketTamer websites, products or communication is for educational purposes only. Nothing in its products, services, or communications shall be construed as a solicitation and/or recommendation to buy or sell a security. Trading stocks, options and other securities involves risk. The risk of loss in trading securities can be substantial. The risk involved with trading stocks, options and other securities is not suitable for all investors. Prior to buying or selling an option, an investor must evaluate his/her own personal financial situation and consider all relevant risk factors. See: Characteristics and Risks of Standardized Options. The www.MarketTamer.com educational training program and software services are provided to improve financial understanding.


The information presented in this site is not intended to be used as the sole basis of any investment decisions, nor should it be construed as advice designed to meet the investment needs of any particular investor. Nothing in our research constitutes legal, accounting or tax advice or individually tailored investment advice. Our research is prepared for general circulation and has been prepared without regard to the individual financial circumstances and objectives of persons who receive or obtain access to it. Our research is based on sources that we believe to be reliable. However, we do not make any representation or warranty, expressed or implied, as to the accuracy of our research, the completeness, or correctness or make any guarantee or other promise as to any results that may be obtained from using our research. To the maximum extent permitted by law, neither we, any of our affiliates, nor any other person, shall have any liability whatsoever to any person for any loss or expense, whether direct, indirect, consequential, incidental or otherwise, arising from or relating in any way to any use of or reliance on our research or the information contained therein. Some discussions contain forward looking statements which are based on current expectations and differences can be expected. All of our research, including the estimates, opinions and information contained therein, reflects our judgment as of the publication or other dissemination date of the research and is subject to change without notice. Further, we expressly disclaim any responsibility to update such research. Investing involves substantial risk. Past performance is not a guarantee of future results, and a loss of original capital may occur. No one receiving or accessing our research should make any investment decision without first consulting his or her own personal financial advisor and conducting his or her own research and due diligence, including carefully reviewing any applicable prospectuses, press releases, reports and other public filings of the issuer of any securities being considered. None of the information presented should be construed as an offer to sell or buy any particular security. As always, use your best judgment when investing.