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Four ETFs Provide Shelter From Summer Storms

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The July-October time frame is the Nasdaq's worst.

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May has passed, but the selling probably hasn't. The calendar says we're only at the beginning of the what is usually the worst six-month period to own stocks in. With elections in Greece and a potentially disappointing Federal Open Market Committee meeting looming on the near-term horizon, there are perhaps more reasons to buy than sell.

And things may not get much better once June concludes. July is usually the best month of the third quarter for stocks, but the seventh month of the year is particularly unkind to the Nasdaq as the July-October time frame is the Nasdaq's worst.

All of that is enough to make some folks want to run and hide, but don't fret because there are some ETFs that can provide cures for the summertime blues.

Direxion Daily Gold Miners Bull 3X Shares (NUGT): Those that are strong believers in seasonal trends know that gold's bullish seasonality is about to kick in a few weeks. There is a chance that gold demand tied Indian wedding season may be a bit of disappointment this year given the macroeconomic headwinds in India, the world's largest gold consumer. Gold perked up in earnest on the back of the dismal May jobs report last Friday, but has since meandered to the downside.

The losses over the past two days haven't been alarming and it should be noted that in recent days, the miners, not bullion have been the leadership group in the precious metals complex. Even with Tuesday's decline of 1.2%, NUGT is up more than 14% in the past week, proving my thesis right that this ETF can easily deliver double-digit gains in less than a week.

First Trust NYSE Arca Biotech Index Fund (FBT): Biotech stocks have been in their own bull market this year, but they haven't been impervious to broader market weakness in recent weeks. In the past week, FBT, the biotech ETF stalwart in 2012, has fallen 4.5% and fallen below its 50-day moving average.

While I reiterated a generally bullish view on FBT's constituents and the ETF itself as the preferred way of playing new drug approvals and increased biotech mergers and acquisitions activity, FBT's 8.43% weight to Vertex Pharmaceuticals (VRTX) is an issue. That stock is FBT's largest holding and the company has problems related to its cystic fibrosis treatment.

Vanguard Telecom Services ETF (VOX): Yes, the Vanguard Telecom Services ETF is type of ETF that your grandparents might own and if they don't like ETFs, they're probably not averse to holding high-yielders such as AT&T (T) and Verizon (VZ). Kidding aside, health care, staples and utilities garner most of the attention when it comes to defensive sectors, but telecom can't be ignored. VOX, which yields over 3%, has outperformed the S&P 500 and the iShares Dow Jones US Telecom Fund (IYZ) over the past month and year-to-date.

PowerShares Dynamic Leisure & Entertainment Portfolio (PEJ) One of the better ETF plays on the summer travel season, PEJ and its holdings are coming into a pivotal time of year. The summer travel season is vital for the likes of Priceline.com (PCLN) and Walt Disney (DIS). Along with other lodging firms, PEJ is also heavy on casual dining and fast food companies. Said differently, the ETF's mettle could be tested in the coming months, or it could be a surprise performer to the upside if the economy starts perking up again.
Editor's Note: This content was originally published on Benzinga.com by The ETF Professor.

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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