Betting on the golden/dead cross
- August 16th, 2011
Compare and contrast:
Barry Ritholtz at The Big Picture, “The bottom line: There are lots of things to worry about, but this [the death cross] is not one of them — its a low probability indicator.”
Direxion Large Cap Tactical Advantage Shares, which will track the Dow Jones Golden Cross Index, splits its portfolio between equities included in the Dow Jones U.S. Large Cap Index and cash equivalents, including T-bills. It is designed to adjust its weighting between stocks and cash based on technical factors called the “golden cross” and the “dead cross.”
“The Golden Cross occurs when the 50 day moving average of the Dow Jones U.S. Large Cap Index crosses above the 200 day moving average,” the filing said, adding that the “dead cross” is the opposite event. A golden cross causes the index to allocate 100 percent to stocks and eliminate the cash component, while a dead cross means that 25 percent of the basket is tied to stocks and 75 percent to cash. That rebalancing happens daily.
And you thought the ETF industry was running out of ideas….
Earlier: “The ETF Singularity, It Is Here!” via Josh Brown at The Reformed Broker
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