Read Larry Connors' blog – Short Term Trading Strategies
The ancient Scriptures state that the end of days will be rife with wars and rumors of wars. Mankind's history has proven that we are war seeking species despite rhetoric and peace accords that temporally lull what seems to be never ending conflicts the world over.
What started as small bands of warriors pillaging their neighbor's village for women, wealth and power has transformed into an intercontinental deadly chess game of Super Powers and Rouge States vying for dominance or attention. The advent of small powerful and cheap weapons has allowed small groups, once again, to yield enough strength to terrify even the largest Super Power Nation.
This dynamic of "terrorism" has opened up an entirely new paradigm in the culture of war, yet one that is as ancient as war itself. The United States has clearly risen as the leader in both the Super Power level and innovative tools/tactics to deal with the never ending threat of terrorism/rouge states.
In fact the term Military Industrial Complex was coined to describe the interdependence of industry and the military machine in the United States. The terrorism threat, conflicts in the Middle East and potential trouble brewing with Russia spell a never ending stream of profits into the companies that build the weapons and technologies of war.
How can an investor profit from these companies in the defense sector? The most efficient and intra-sector market instrument, in my opinion, would be the Power Shares Aerospace and Defense ETF. This Exchange Traded Fund has a goal of tracing the SPADE defense index which is rebalanced quarterly and reconstituted yearly to maintain relevance in this quickly changing world. Its primary holdings and their weightings are as follows:
As you can see from the weekly chart, price is below the 50 period SMA but climbing off of its recent July lows.
The daily chart looks technically more bullish with price being above the 50-day SMA at 19.11 and exhibiting a choppy uptrend since July 14th. The 200-day SMA is 20.67.
Regardless of your political affiliation and opinion on U.S. policy, as a trader or investor, the Power Shares ETF PPA is worth looking at very closely right now.
Best Wishes!
David Goodboy is Vice President of Marketing for a New York City based multi-strategy fund.
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