4 Inverse ETFs For Sell In May (BZQ, DZZ, FXP)
May 4 is turning out to be one of those days that are good for one thing: Helping traders and investors come to grips with reality and the realities in this case are two-fold. First, it's unfortunately obvious that caution, not ebullience is the order of the day when it comes to U.S. economic data. Second, the phenomenon known as "Sell in May and go away" could be a real problem this, if Friday's action is any indication.
Selling in May isn't the worst thing in the world for those that are properly prepared and ETFs certainly offer myriad avenues for that preparation. We've previously highlighted multiple funds, including some inverse plays that have the look of worthy sell in May plays.
Today, we're building on that theme with a list comprised of entirely of inverse and leveraged ETFs that could prove to be highly profitable short-term trades if the market has to endure an acute case of the summertime doldrums.
ProShares UltraShort MSCI Brazil (NYSE: BZQ) Remember the time when ETFs such as the iShares MSCI Brazil Index Fund (NYSE: EWZ) and the Market Vectors Brazil Small-Cap ETF (NYSE: BRF) were sporting year-to-date gains of almost 20%? Yeah, it's hard to remember, but it was sometime in February. These days, EWZ is clinging to positive territory on a year-to-date basis.
The charts for EWZ, BRF and other long Brazil funds are simply broken at the moment. On the other hand, BZQ is up more than 6% in the past two days alone. A move above $17.50 and BZQ will samba even more to the upside.
Direxion Daily Gold Miners 3X Shares (NYSE: DUST) DUST doesn't get a lot of press, which is odd considering its volume is better than fair at almost 238,000 shares per day. Even more odd is the fact that everyone and his sister knows that gold mining ETFs such as the Market Vectors Gold Miners ETF (NYSE: GDX) have stunk up the joint this year and the charts for these funds indicate more downside is on the way. Up 29% year-to-date, DUST is arguably one of the best leveraged ETFs no one has talked about.
PowerShares DB Gold Double Short ETN (NYSE: DZZ) The ProShares UltraShort Silver (NYSE: ZSL) made our previous list of sell in May and go away candidates and even though ETFs such as the iShares Gold Trust (NYSE: IAU) are higher today, the technical outlook is still murky at best for gold futures. If gold fails to break resistance at $1,670 an ounce or fails to hold support at $1,630, DZZ immediately becomes an attractive short-term play.
ProShares UltraShort FTSE China 25 (NYSE: FXP) The iShares MSCI China 25 Index Fund (NYSE: FXI) has an interesting track record in May-October time frame over the past several years. The largest China ETF was badly beaten in that period in 2008, but was a stellar performer a year later. FXI inched higher in May-October 2010 and was again taken to the woodshed last year.
Where we're going with this is FXI doesn't look like a bowl of cherries right now and Chinese stocks have clearly been hurt by sell in May and go away in the past. If FXI breaks $36, FXP becomes all the more attractive. Or swing for the fences with the Direxion Daily China Bear 3X Shares (NYSE: YANG).
For more on inverse ETFs, please click HERE.
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