ETF Monthly Rotation System Positions – System Override


The ETF’s below fill the three top spots in the ETF monthly rotation system.  Because this is the first month that I’m trading the system and initiating new positions, there is a little *gasp* subjectivity involved.

Opening Trade:

Bought 265 shares of FAN at 11.20 on 11/1/13

As part of the diversified trend following portfolio for small accounts, I took a position in the number 2 ETF, FAN – First Trust Global Wind Energy.  However, I did not take a position in TAN – Guggenheim Solar, the top performing ETF.

I chose to take a position in FAN because it was the only ETF in the top three with an increase in it’s average rate of change.  The reasons I decided to bend the rules and skip a new position in TAN is that the AROC reading for TAN is both nearly double that of FAN and decreased in October.  Please note that the only reason this discussion is necessary is that this is the first month the system is being traded.  When new ETF’s push into the top spots, the system will be totally mechanical.

#1 TAN – Guggenheim Solar ETF

AROC (10/31/13):  65.96

AROC (9/30/13): 69.49

Description and discussion:

TAN is an etf that is intended to mirror the MAC Global Solar Energy Index.  TAN invests in the publicly traded Solar companies around the world.

TAN is one of the top, if not the top, year to date 2013 year to date ETF performer.  Numerous stories have popped up and media coverage has been increasing.  One potential reason for pause is that the AROC fell from 69.49 to 65.96 in October.

TAN ETF Rotation System

#2 FAN – First Trust Global Wind Energy

AROC (10/31/13):  34.65

AROC (9/30/13):  31.81

Description and discussion:

FAN is intended to track the ISE Global Wind Energy Index and invests in companies that provide goods and services in the wind energy industry.  FAN is the only ETF in our top three with an AROC increase over the past month, which means the position was a relatively stronger performer over the past 30 days.  As mentioned above, I only have an open position in FAN.

FAN ETF Rotation System

#3 PGJ – Powershares Golden Dragon China Portfolio

AROC (10/31/13):  29.73

AROC (9/30/13):  39.50

Description and discussion:

PGJ is based on the NASDAQ Golden Dragon China Index.  The ETF invests in companies that derive the majority of their revenue from China, are incorporated or headquartered in China, and are US exchange listed.  The top holding list has quite a few ADR’s and around a 50% concentration in the Information Technology sector.

PGJ ETF Rotation System