MrJohnRoss' Account Talk

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Nice, John! One question: Why URTY / SRTY and not TNA / TZA? There's no comparison when it come to volume (liquidity) and I assume the bid / ask spreads are better. Just wondering. Thanks!
 
tsptalk said:
Nice, John! One question: Why URTY / SRTY and not TNA / TZA? There's no comparison when it come to volume (liquidity) and I assume the bid / ask spreads are better. Just wondering. Thanks!
Click to expand...

Good question. Let's look at URTY vs TNA. When you compare the two, each one is very close to the other on a daily basis, with some minor fluctuations. However, looking at the relative performance chart on a longer term basis, you can see that URTY is clearly outperforming TNA. The difference is not huge, (about 2% over two yrs), but why not get that extra bit of performance if it's available?

The chart of SRTY vs TZA looks essentially the same.

The bid/ask spread comparison is something I'll have to look into, and may invalidate my elementary logic.


URTY - TNA.png
 
Thanks. I get URTY with a +0.08% advantage since Dec 31, and SRTY with a 0.34% difference, so yes it has a slight advantage.

I guess that is a good reason. I just get a little nervous with spreads when volume is so low.... comparing URTY (254,000 shares traded today) with TZA (13,000,000).
 
Is the bid/ask spread affected by volume or broker/fund fees, or both? Or am I missing the picture completely?
 
The wider the spread, the more they make on each transaction. The higher volume vehicles don't need to do much more than a 0.01 spread. But you could see 0.05 to 0.10 spread or more (per share) on the stocks with lighter volumes. If you trade often this can add up.
 
I spent some time yesterday trying to find historical bid/ask spreads for TZA/SRTY, but didn't have much luck, so I ran some numbers from the closing data, and here's what I found...

[TABLE="width: 256"]
[TR]
[TD="class: xl65, width: 64"][/TD]
[TD="class: xl66, width: 64"]CLOSE[/TD]
[TD="class: xl66, width: 64"]BID[/TD]
[TD="class: xl66, width: 64"]ASK[/TD]
[/TR]
[TR]
[TD="class: xl67"]TZA[/TD]
[TD="class: xl65"]21.04[/TD]
[TD="class: xl65"]21.05[/TD]
[TD="class: xl65"]21.12[/TD]
[/TR]
[TR]
[TD="class: xl65"][/TD]
[TD="class: xl65"]DIFF[/TD]
[TD="class: xl65"]0.01[/TD]
[TD="class: xl65"]0.08[/TD]
[/TR]
[TR]
[TD="class: xl65"][/TD]
[TD="class: xl65"][/TD]
[TD="class: xl65"][/TD]
[TD="class: xl65"][/TD]
[/TR]
[TR]
[TD="class: xl67"]SRTY[/TD]
[TD="class: xl65"]13.26[/TD]
[TD="class: xl65"]11.5[/TD]
[TD="class: xl65"]13.74[/TD]
[/TR]
[TR]
[TD="class: xl65"][/TD]
[TD="class: xl65"]DIFF[/TD]
[TD="class: xl65"]-1.76[/TD]
[TD="class: xl65"]0.48[/TD]
[/TR]
[/TABLE]


The max spread for TZA was $.08 from the closing price, while the max spread for SRTY was (gulp) $1.76 from the closing price. That's a huge difference, especially when you consider that's a per share cost.

This may be an extreme case, as we're only looking at one moment in time, but I think it may turn out to be a pretty good indicator of the spread disparity between the two. I will continue to monitor the spreads, but it looks like Tom hit the nail on the head on this one.

Thank you Tom!
 
Yes, those after hours spreads are just because the market is closed and there are few orders in. You'll get some better figures when the market opens Monday.
 
tsptalk said:
Yes, those after hours spreads are just because the market is closed and there are few orders in. You'll get some better figures when the market opens Monday.
Click to expand...

That's what I was thinking as well. Considering how low the volume is while the market is open, I imagine it only trades a few times a day in after-hours.
 
Not surprised to see the markets rebound a bit here, after last week's softness. However, the transports are hot, and just hit it's 10th new high of this upward impulse. RSI is over 73. Time for a cool-down.
 
MrJohnRoss said:
Not surprised to see the markets rebound a bit here, after last week's softness. However, the transports are hot, and just hit it's 10th new high of this upward impulse. RSI is over 73. Time for a cool-down.
Click to expand...

possibly soon, market is starting to get greedy again
 
DUST is getting wallopped, but system will continue to hold.

SRTY is down as well, but not enough to cause a switch. Let's see what tomorrow brings.
 
MrJohnRoss said:
Stock prices are going up as earnings growth expectations are going down

Read more: ​
Click to expand...
People are investing regardless of what or how their respective companies are doing. The belief is in the future. SPX 1850 easily by the end of the year. It's just crazy how the market is grabbing investors. What else is out there?
2014... something about that year, that even number. Grab your socks and your hats. Get out the door and join the parade before it goes dullsville. Strike up the band Clyde.
 
MrJohnRoss said:
Stock prices are going up as earnings growth expectations are going down

Read more: ​
Click to expand...

This has been pointed out for some time by some of the pros I watch. Dividends are looking less attractive the higher many of the dividend stocks go too. I don't like it. Too many momentum plays that are relying on the Fed pump to sustain this bull market. Supposedly, many think this can go on for some time yet. Perhaps, but it doesn't feel much like "investing" to me. More like speculating on Fed policy. It works for now.
 
NUGT/DUST will continue to hold DUST. DUST up another 3.7%.

URTY/SRTY will continue to hold SRTY. SRTY up another 1.1%.
 
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