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
. 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:
Remember the time when ETFs such as the iShares MSCI Brazil Index
) and the Market Vectors Brazil Small-Cap ETF (NYSE:
) 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 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:
) 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
PowerShares DB Gold Double Short ETN (NYSE:
The ProShares UltraShort Silver (NYSE:
) made our previous list of sell in May and go away candidates
and even though ETFs such as the iShares Gold Trust (NYSE:
) 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:
The iShares MSCI China 25 Index Fund (NYSE:
) 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:
For more on inverse ETFs, please click
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