Election Day is five days away. That means the first
post-election trading session is just six days away. The list of
ETFs that could surge
following reelection for President Obama
has been unveiled. Predictably, the list included pharmaceuticals
and telecommunications funds, among others.
Now, it is time for one final examination of the sector funds
that stand a chance of rallying in the wake of a victory by
Republican challenger Mitt Romney. Without further ado...
Direxion Daily Financial Bull 3X Shares (NYSE:
There has already been speculation
financial services names are pricing in
a Romney win. Then there is the fact that donation numbers do not
lie. Wall Street loved President Obama in 2008. Four years later,
the Street has sent more than triple the donations to Romney as
it has to the President.
Investors should note that the inclusion of the Direxion Daily
Financial Bull 3X Shares on this list is not long-term investment
advice. FAS and related ETFs are anything but long-term holds.
Rather, if Romney pulls off the upset, it would not be surprising
to see financials overreact in positive fashion. In that
scenario, FAS is an ideal trade for two or three days.
iShares Dow Jones US Medical Devices Index Fund (NYSE:
Why this consequence, unintended or otherwise, of Obamacare is
not getting more press is baffling. The Battelle Technology
Partnership Practice released a study that found a tax within
Obamacare on medical device makers could lead to the loss of tens
of thousands of jobs and billions of dollars of lost economic
output. That is bad news for the economy
and terrible news for ETFs such as IHI
The risk to the long IHI/Romney victory trade is that it is
unlikely he will be able to overturn Obamacare in his first term,
let alone his first 100 days in office. If IHI falls below $66
following the election, the smart thing to do would be wait for
another $2 or $3 to come off before getting involved.
Market Vectors Unconventional Oil & Gas ETF (NYSE:
FRAK debuted in February and its assets under management total of
$18.5 million is fair at best. Some of the air has come out of
this ETF in the past month as oil prices and equities have
fallen. However, it should be noted that FRAK started to move
higher just as it became clear Romney would be able to give
President Obama a real run for his money.
Whether he walks the walk if he wins is another story, but
Romney has talked the talk regarding increased domestic energy
production. That rhetoric alone could be enough to spark FRAK and
other equity-based oil ETFs in the days immediately following the
election. Assuming Romney wins, of course.
Market Vectors Coal ETF (NYSE:
Politically speaking, the case of the Market Vectors Coal ETF is
an interesting one. Coal's future lies with the metallurgical
variety that is craved by emerging markets for steel production.
Most metallurgical coal is produced in small western states that
are not politically competitive.
Thermal coal,which is used for power generation, is produced
in swing states such as Ohio and West Virginia. Coal and KOL have
plunged due to slumping natural gas prices. Cheaper and cleaner
than coal, natural gas has been increasingly used by electric
utilities. That does not mean politicians will not make political
hay out of coal production.
Romney is even
running ads in coal-rich Pennsylvania
, a state a Republican has not won since 1988.
Given President Obama's still vocal commitment to alternative
energy, Romney is the safer play for those that are long KOL and
its constituents. The ETF is up 10 percent in the past month.
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