Two trading days into September, it is fair to say the broader market is not doing much of anything...yet. Strong trends in either direction have yet to emerge, but traders can take heart in knowing that September is not a good month for stocks.
In fact, the ninth month of the year is usually quite harsh to equities and
that could create opportunities with select inverse ETFs. Add some leverage to the mix and those traders willing to take on some added risk can make this a September to remember from the downside with the following ETFs.
ProShares UltraShort FTSE China 25 (NYSE: FXP)
First, the risks with FXP and those go beyond the fact that this is a double-leveraged product. There has been rampant talk about
Chinese stimulus and the Peoples Bank of China could act at any moment to lower interest rates. Either scenario would be damaging to FXP.
On the other hand, it must be noted the iShares FTSE China 25 Index Fund (NYSE:
FXP), the ETF that FXP is the inverse equivalent of, is in the midst of tailspin. FXI traded above $35 as recently as early August. If support for FXI gives out at $32, FXP will run even more. Chinese equities are cheap on a valuation basis, but have been for months. Investors do not appear to be taking the bait, at least not with FXI and that bolsters the near-term bull case for FXP.
ProShares UltraShort QQQ (NYSE: QID)
The ProShares UltraShort QQQ is another double-leveraged ETF with near-term risk that cannot be overlooked. If Amazon's (NASDAQ:
AMZN) new tablet and Apple's (NASDAQ:
AAPL) latest iPhone, both due to be introduced in the coming days, wow consumers, QID could suffer. Those stocks account for 23.5 percent of the weight of the PowerShares QQQ (NASDAQ:
QQQ), the Nasdaq 100 tracking ETF. QID is the double-leveraged inverse equivalent of QQQ.
Of course, not every new tech gadget thrills consumers and investors. In addition, September is typically a weak month for semiconductor stocks and that is one credible reason to evaluate QID. QID really needs a move above $30 to stoke some fresh buying.
ProShares UltraShort Silver (NYSE: ZSL)
Of the three ETFs highlighted on this list thus far, ZSL is by far the riskiest. An almost 16 percent gain in the past month for the iShares Silver Trust (NYSE:
SLVhere.
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