ETF Stocks' Trade of the Week

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By ETF Stocks 

Once again we are going to approach the week with a ZERO Trade. With the outlook for stocks somewhat mixed in the short-term, ETF Stocks wants to take a more defensive action and implement a strategy that can return a profit if stocks go up or down.

During our weekend examination of sector stock charts, it appears as if Wall Street favors large-cap growth stocks and is turning its back on small-cap growth stocks. Call it the Apple Inc. (AAPL) effect.

For our ZERO Trade, we would like to buy a large-cap growth ETF. A good example would be PowerShares QQQ Trust, Series 1 (QQQ). On the opposite side, we want to short a small-cap growth ETF. Something like Vanguard Small-Cap Growth ETF (VBK) will do.

To execute the trade, we buy $10,000 (or whatever your comfort level is) of QQQ and short $10,000 of VBK. As long as QQQ – minus expenses, commissions and fees – outperforms VBK, you have a winning trade.

If bulls decide to take a well-deserved and much anticipated vacation, the ZERO Trade is a safer way to stay in the market. If we make the correct call on over- and under-performing sectors, you might make some money while everybody else gets nervous.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , ETFs , Investing Ideas , Stocks

Referenced Stocks: AAPL , QQQ , VBK

ETF Stocks


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