Barebonez (95.30)

Profit On Volatility With ETFs AKA The Bear Trap Beater

June 03, 2009 – Comments (0) | RELATED TICKERS: QQQQ , XLV , XLP

Very interesting stratagy from Adam Johnson of MLN Capital on CNBC

Adam Johnson, managing director at MLH Capital, said that in a volatile market, he sees opportunities in ETFs. “We have found that in this kind of volatility, when the Dow is down 100 or 200 points at a moment’s notice on any given day, it’s easier to focus on ETFs than individual names," said Johnson. “You’re limiting the amount of risk that you’re taking with a given position.”

QQQQs are not down as much as the broader stock market on down-days,” he said. “Buy it on the down-days on the expectation that it won’t be down as much, but they will rise more on the up-days.”

Johnson also recommended the ETFs in the healthcare sector XLV and and consumer staples sector

XLP 

 These are the places "where people are going. So that even if one name in the group blows up, you can manage the risk,” he said.

Im going to test this out this week in this Bear Trap turn, bercause JIM CRAMER officially called it a

BULL Market yesterday on MAD MONEY@!!!!!!