Market Overview

A Look Ahead: This Week's ETFs to Watch

U.S. stocks are coming off their worst weekly performance of the year last week and that glum showing provides fodder for those that know August is historically a rough month in which to be long stocks.

Just two trading weeks are left this month and 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.

Related: Seasonal Trends: Three ETFs to Own in August.

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. 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 (NYSE: GDX)
Or really just about any gold or silver mining ETF. Over the past month, six of the 10-best performing non-leveraged ETFs are related to gold or silver in some way. GDX, up 20.2 percent over that time, is on the list. Consecutive closes above the $28.50 area bodes well GDX, particularly if that price range turns into new support in the even 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 percent 56,604 contracts for the week ending August 13.

Those opting for the Direxion Daily Gold Miners Bull 3X Shares (NYSE: NUGT) should remember that ETF will be reverse split 1-for-10 on Tuesday.

ProShares Ultra Consumer Services (NYSE: 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 (NYSE: 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 percent 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 are REIT funds.

For more on ETFs, click here.

Posted-In: Long Ideas News Sector ETFs Broad U.S. Equity ETFs Short Ideas Specialty ETFs New ETFs Emerging Market ETFs Best of Benzinga

 

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