October has an interesting reputation when it comes to the
performance of stocks. The tenth month of the year is when some
of the most wicked market plunges have taken place. Conversely,
October is the month when some of the worst bear markets on
record have gone to die.
Simply put, October can be a volatile month. It is the last
month in the worst six months of the year cycle. In 2012, a
presidential election will take place just days after October
ends. It might still be too early to predict exactly where stocks
will finish by the time the month ends. Eight trading days into
the month things are not looking good, broadly speaking. Use
these leveraged ETFs to survive and thrive this month.
ProShares UltraShort Silver (NYSE:
Getting in front of the silver freight train has proven hazardous
to one's health in recent months. In the past three months, the
iShares Silver Trust (NYSE:
), the largest EF backed by holdings of physical silver, is up
nearly 26 percent.
There is no refuting that is an excellent run. There is also
no refuting the fact that the global economy remains lethargic
and approximately half of silver demand is industrial. The
prescient trader that chooses to
acknowledge and embrace seasonality
will find that October is historically a dreadful month to be
long silver. Be long ZSL instead.
ProShares Ultra DJ-UBS Natural Gas (NYSE:
Given that the U.S. Natural Gas Fund (NYSE:
) has been an utter disaster, the endorsement of an ETF that is
essentially the bullish leveraged equivalent of it might seem
perplexing. Fair concern. UNG has lost almost 89 percent of its
value since debuting five-and-a-half years ago, but it the ETF is
trying to shed that depressing status.
The fund has jumped 16.7 percent in the past month, sparking
BOIL to a 35.2 percent gain in the process. Natural gas
fundamentals, namely production, are not fully in favor of the
bulls. The technicals might be though. Those that get involved
with BOIL must pay attention to UNG. That means watching for a
break of resistance at $22.72.
Should the fund manage to break resistance, look for a quick
run to the next resistance level of $23.92. Beyond that, no
resistance comes into play until $27.
Direxion Daily Healthcare Bull 3X Shares (NYSE:
CURE has average daily volume of just over 2,500 shares and that
alone might be enough to keep some traders away. At least the
ticker is easy to remember. Kidding aside, CURE is worth a look
for a couple of reasons.
First, if market volatility increases, investors could
and should continue embracing pharmaceuticals
. Second, pharmaceuticals names pay solid dividends and the
sector is not expensive. The Health Care Select Sector SPDR
), ETF that CURE is the leveraged equivalent of, trades for less
than 14 times earnings.
Finally, CURE could be an interesting ETF to get involved with
late this month on the assumption that pharmaceuticals names will
rally if President Obama wins reelection. Regardless of one's
political leanings, it cannot be ignored that XLV has been
identified by analysts as
an ETF winner if the President stays in
For more on ETFs, click
(c) 2012 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.