3 ETFs to watch this week
These exchange traded funds will almost certainly be in play.
U.S. stocks are coming off their worst weekly performance of the year, and that glum showing provides fodder for those who know August is historically a rough month in which to be long stocks.
Just two trading weeks are left this month. While that may sound like it could bring some much-needed relief to suddenly vulnerable bulls, it may not. After all, September is the worst month of the year for stocks.
All is not lost, however. For the selective, there are some compelling opportunities with which to ride out the rest of August. For the adventurous, there are even more opportunities (Benzinga). No guarantees about which group, adventurous or conservative, will come out on top in the coming weeks, but we can say the following ETFs will almost certainly be in play this week.
Market Vectors Gold Miners ETF (GDX)
This ETF or really just about any gold or silver mining ETF will be in focus as investors take note. Over the past month, six of the 10-best performing non-leveraged ETFs were related to gold or silver in some way. GDX, up 20.2% over that time, is on the list. Consecutive closes above the $28.50 area bode well for GDX, particularly if that price range turns into new support in the event of a pullback.
What else bodes well for GDX is that gold traders are feeling more ebullient about the yellow metal. According to the U.S. Commodities Futures Trading Commission, net long positions in gold futures and options contracts surged 18%, or 56,604 contracts, in the week ending August 13 (Bloomberg).
ProShares Ultra Consumer Services (SCC)
Among leveraged ETFs, the ProShares Ultra Consumer Services does not grab a lot of press, but this could be the fund's time to shine. Remember last week's consumer sentiment number? You know, the one that was the worst in four months?
Then there are the ominous looking charts for an array of consumer discretionary ETFs. Adding to the bull case for the bearish SCC is the notion, one espoused by Bank of America Merrill Lynch in a research report published last week, that discretionary stocks are "overowned and overvalued." The sector and its ETFs have been market leaders for over three years. A rest/pullback could finally be coming to fruition and that should benefit SCC.
Direxion Daily Real Estate Bear 3X Shares (DRV)
Watch for the Direxion Daily Real Estate Bear 3X Shares to break resistance at $19 because, if it does, the upside potential from there is considerable. As it is, DRV surged 22% just last week. The catalyst is easy to spot.
Rising Treasury yields are bad news for REIT stocks and ETFs. Yields on U.S. government 10-years are up 30 basis points in the past month. Over that same time, eight of the 20-worst non-leveraged ETFs were REIT funds.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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