NEW YORK ( TheStreet) -- It's no secret that the bull market over the last several years has been fueled by the loose monetary policies and aggressive quantitative easing of the Federal Reserve. Investors around the globe closely monitor every word of Fed Chairman Ben Bernanke's speeches in order to divine the next big opportunity in their investment portfolios. Often his remarks have an immediate and profound effect on major markets, which is why it is important to pay close attention to key segments of the economic landscape.
From my own experience watching the markets and trading for my clients' portfolios, I have often seen big moves made in a very short time, based on even the hint of a policy shift from the Fed. These swift swings can be either positive or negative for your portfolio, depending on your asset allocation and response to change.
By monitoring these four ETFs you can get ahead of the curve and potentially avoid any long-term pitfalls on the road to prosperity.
StocksThe first ETF to which I always pay attention whenever there is breaking news is the SPDR S&P 500 (SPY). This well-known bellwether tracks the 500 largest domestically traded public companies and, as one of the most widely held and actively traded ETFs in the world, it is an excellent barometer for the health of the stock market.
Hedge funds, banks, professional money managers and everyday investors trade hundreds of millions of shares of SPY and volume explodes whenever there is a major global news event. It pays to have SPY on your watch list and monitor it regularly for big volume swings or price moves. This often can precede a broader change in the direction of the market and may signal that you should adjust your portfolio accordingly. Bonds My favorite ETF for monitoring the bond market is the iShares Barclays 20+ Year Treasury Bond Fund (TLT). This fund is made up of long-duration U.S. Treasury bonds and often times makes very volatile moves when the Federal Reserve signals a change in its interest-rate agenda. Bonds furthest from their maturity date are typically most susceptible to changes, which is why this ETF can move so rapidly. Think of TLT like the tip of a dog's tail, the point that is going to move the farthest whenever he wags it.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV