Do Investors Hold over the Weekend or do They Sell?

Do investors sell their stocks on weekends so as to avoid potentially nasty surprises?





I looked at the closing data for each weekday in 2008 for DIA, SPY, and FXP (as well as FXI, XLF and VIX). DIA and SPY represent two broad indxes, FXP and FXI and Chinese ultra ETFs (short and long respectively), and the VIX is the volatility index.

For calculations I used the adjusted day's close minus close of the previous trading day. The objective was to see if people held these over the weekend. These are the results, and also shown in the graph above:


DIA:

Fridays: 10 down days, 2 up days, average -0.81%
Mondays: 4 down days, 6 up days, +0.35%
Tuesdays: 6 down days, 6 up days, +0.23%
Wednesdays: 6 down days, 7 up days, +0.03%
Thursdays: 6 down days, 7 up days, -0.14%

SPY:

Fridays: 10 down days, 2 up days, average -0.75%
Mondays: 5 down days, 5 up days, +0.23%
Tuesdays: 5 down days, 7 up days, +0.20%
Wednesdays: 7 down days, 5 up days, -0.14%
Thursdays: 7 down days, 6 up days, -0.13%


FXP:

Fridays: 5 down days, 7 up days, average +0.16%
Mondays: 6 down days, 4 up days, -0.56%
Tuesdays: 6 down days, 6 up days, +0.38%
Wednesdays: 5 down days, 7 up days, +1.61%
Thursdays: 5 down days, 8 up days, +1.29%

FXI:

Fridays: 7 down days, 5 up days, average -0.08%
Mondays: 3 down days, 7 up days, +0.47%
Tuesdays: 6 down days, 6 up days, -0.44%
Wednesdays: 7 down days, 5 up days, -0.71%
Thursdays: 8 down days, 5 up days, -0.74%

XLF:

Fridays: 7 down days, 5 up days, average -0.69%
Mondays: 5 down days, 5 up days, -0.51%
Tuesdays: 6 down days, 6 up days, +0.79%
Wednesdays: 7 down days, 5 up days, -0.01%
Thursdays: 8 down days, 5 up days, -0.35%

VIX:

Fridays: 6 down days, 6 up days, average +1.75%
Mondays: 7 down days, 3 up days, +0.01%
Tuesdays: 7 down days, 5 up days, -0.88%
Wednesdays: 5 down days, 7 up days, +0.57%
Thursdays: 7 down days, 6 up days, -0.54%

SUMMARY:




Looks like the results for DIA and SPY are pretty conclusive for Fridays. It seems that few people want to hold these during weekends. This is also consistent with the VIX being up on Fridays, percentage wise.

Interestingly FXP seems to do very well (long) on Wednesdays and Thursdays.

The Counterparty to Leveraged or Inverse ETFs

If you think you can make money by investing in leveraged ETFs, please make sure you know who your ETF's counterparty is. For example, one such ETF is the ProShares SKF, which features a 2X inverse return on financials. Sounds like a great place to invest funds if you expect the mess in the US to continue. Well, nothing is free. All these funds have counterparties, and as you know these days these counterparties may go bankrupt at any time. In fact, last week had the Fed not intervened, a like very big counterparty was supposed to go bankrupt until it was bailed out by the Fed (using future American children's money).

I asked ProShares who the counterparty to SKF is. This is their response:


"Thank you for your email today regarding ProShares. At this time, ProShares LLC does not disclose the counterparty names for the derivative products within the portfolio. Please refer to the attached prospectus for further information on the UltraShort Financials fund.

Sincerely,

ProShares Shareholder Services"

Canadian ABCP Rescue Saga Continues

After missing several deadlines to complete the rescue plan, the agreement has failed yet again. So now the major players are seeking bankruptcy protection for the 20 trusts that issued the paper. This saga has been going on since last August.

The banks will file an application in Ontario Superior Court to put the 20 trusts under the protection of the Companies' Creditors Arrangement Act, a law normally used by companies that are trying to restructure under bankruptcy protection, thus preventing creditors from seizing assets and halts lawsuits against the company.

Meanwhile, investors in the supposedly safe funds are out of luck. None of this is unexpected but with the deteroriation of the banks situtation in the US, any hope that whoever put money into these funds will be able to recover it at full value and soon is just misguided.

Noront and Fancamp Update, Just be Patient

As reported in February. Robert McEwen and others bought into a private offering of Noront. The purchase price was $4, with additional warrants at $5, exercisable for 2 years. Noront currently trades around $7, just a few weeks after this announcement. These investors have made, at least on paper, many millions of dollars of profit.

Fancamp reached today a new 52-week high, currently trading around $3. This stock was trading at $1.30 in January, and around $0.17 1 year ago.

These stocks will likely have major pullbacks, offering new entry opportunities. As the markets experience severe down swings, expect these stocks to be hit hard as investors take profits and get rid of speculative positions. All you need is patience to get a better entry point.

NOT has the best drill results (so far), FNC the best property.