Today in the market, Friday August 8, 2008: The stock market was up strong today as crude oil price drop. The market ended almost 2 1/2% higher and ended the week with solid weekly gains. All this even with war breaking out between Russia and Georgia. That takes nerve to be long the market going into a weekend. Certainly a very positive note. Are we seing a recovery here? Time will tell.
ETF/CEF Low Volatility:
- AWF – Alliance Wrld Dlr Govt II close above $12.50
- IJK – MidCap 400 Growth iShares close above $88.00
ETF/CEF Medium Volatility:
- PHK – PIMCO High Income Fund close above $11.75
ETF/CEF Catch a Falling Knife on the Road to Recovery (FKRR):
- IJH – MidCap 400 iShares
- IWP – Russell Mid-Cap Growth iShares
- IYZ – Telecom iShares
- MDY – S&P Midcap SPDRs
- PWJ – Powershares Dynamic Mid Cap GR
- VOX – Vanguard Telecommunication Services VIPERs
ETF/CEF Discussion:
Okay, I’ve added a new twist to some of the picks. I have qualified some of the buys with “close above $xx.xx” to give you some guidance. I believe these are good picks if they push up above the target closing price. Also I’ve modified RSI to narrow its choices to conform to the “Road to Recovery” philosophy that has been applied to the falling knife group.
RSI continues to like mid-cap funds and now has added telecom ETFs to the mix. Let’s cover the two Closed End Funds (CEFs) first. AWF has a P/Y/E of -10.18/9.25/1.53. Not too bad, I would buy these numbers. PHK has a P/Y/E of +9.01/13.00/1.53. I’m bothered by the +9.01% premium over NAV. If this fund drives back to par, you would lose the premium effectively off the 13% yield to give you a payout of 4%. Then there is the price appreciation, predicted by RSI. It does have the PIMCO name as a plus, so you decide.
As the two charts show, all the funds have come off there highs and are undergoing somewhat of a price recovery. I like that…it matches the old axiom “Buy cheap and sell dear.” I trust RSI has found some good funds to match this old adage.
Have a good weekend.
