Five Stocks For The End Of QE2 (DGZ, SZO, PSQ, VXX, TLH)
Are you prepared for the end of QE2?
The end of Quantitative Easing will no doubt be a shock for the American stock markets, as well as for global markets. It's not a question of if but when it will end. And when it does, you need to be ready.
The following trading ideas will help you profit from the fateful day Big Ben announces the end of easy money and zero percent federal funds rate.
Gold Short ETN – The PowerShares DB Gold Short ETN (NYSE: DGZ) follows the opposite of the gold price. You will not want to be caught on the long side of the gold trade when the Fed decides to raise interest rates. There is no doubt that a stronger dollar will eat away at the gold price. All things likely, investors' immediate reactions will be a rush for the exits. Without a doubt, there will be a sharp correction to the price of gold; a short position will be a good hedge against the temporary damage that the Fed's announcement may do to the markets.
Crude Oil Short ETN – The gold short principle also applies to oil, as a stronger dollar buys more oil (for lack of a more complex explanation). Investors will certainly be in a rush to abandon their long oil positions after Big Ben announces a fed tightening, and you can profit from PowerShares DB Crude Oil Short ETN (NYSE: SZO), which moves inversely to the price of oil.
ProShares Short QQQ ETF – The Short QQQ ETF (NYSE: PSQ) moves inversely to the NASDAQ 100, and is a good general hedge against sharp negative moves in the market. This ETF would be good to scoop up a few days ahead of the Fed announcement.
VIX Futures ETN – The VIX Short-Term Futures ETN (NYSE: VXX) follows the Volatility Index, which is the measure of shorts and other hedges against long positions. Investors will definitely be buying downside protection for their long positions after the Fed announces its first rate increase. If you're not privy to shorting gold and oil, you can profit from the spike in the VIX by buying this ETN.
Barclays 10-20 Yr Treasury Bond ETF – The 10-20 year Treasury Bond ETF (NYSE: TLH) seeks results that correspond to the performance of US Treasury Bond obligations with maturities between 10 and 20 years. Expect this one to pop when the Fed decides to hike rates, as its value will rise as treasuries' valuations rise.
Disclaimer Neither Benzinga nor its staff recommends that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you perform your own due diligence and consult a certified financial professional for personalized advice about your financial situation.
(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.Advertisement