September has a bad, though well-deserved reputation as the
worst month of the year for stocks.
On a historical basis, it is the worst month of the year for
the S&P 500, Dow Jones Industrial Average, Nasdaq Composite
and the Russell 1000. Small-caps are sort of less bad as there
are two months that are less kind to the Russell 2000 than
Three ETFs To Own In August
This September has the potential to be even more volatile than
recent editions of the ninth month of the year. August saw the
largest monthly outflows from U.S. ETFs since early 2010.
President Obama continues to mull a military strike against Syria
and 10-year Treasury yields continue a
a dangerous flirtation with the three percent
With a rocky September possibly in the offing, investors would
do well to get acquainted with the following ETFs as short-term
trades for this month.
ProShares UltraShort Basic Materials (NYSE:
) Did you know that of the nine sector SPDRs none make more
frequent appearances as the worst performer in a given month than
the Materials Select Sector SPDR (NYSE:
). XLB holds that dubious distinction in three months of the
year, including September. XLB's slack historical September
performances are usually an extension of a trend that started in
August when the ETF is also usually the worst SPDR.
The ProShares UltraShort Basic Materials attempts to deliver
twice the daily inverse returns of the Dow Jones U.S. Basic
Materials Index. That is not XLB's underlying index. Rather, it
is the benchmark for the iShares U.S. Basic Materials ETF (NYSE:
), which is to say one needs keep an eye on IYM if one is long
ProShares UltraShort Utilities (NYSE:
) The suggestion of the often overlooked ProShares UltraShort
Utilities would seem to go against conventional wisdom that shows
the utilities sector is usually decent or less bad in September.
That is the case on a historical basis, but with Treasury yields
rate-sensitive sectors are not to be trusted in
the month ahead
SDP seeks to deliver twice the daily inverse returns of the
Dow Jones U.S. Utilities Index, which is the underlying index for
the iShares U.S. Utilities ETF (NYSE:
Direxion Daily Energy Bear 3X Shares (NYSE:
) The Stock Trader's Almanac
shows investors that September
is usually a good time to short oil. That could again be the case
this year, particularly if some of the "Syria premium" comes out
of crude futures.
The Direxion Daily Energy Bear 3X Shares is an ideal play for
risk-tolerant, active traders looking to profit from declines in
energy equities. ERY is the triple-leveraged, bearish answer to
the popular Energy Select SPDR (NYSE:
). What that means is when one is long ERY, one wants to see
stocks like Exxon Mobil (NYSE:
) and Chevron (NYSE:
) fall. Traders looking to participate in downside for oil
futures should consider the PowerShares DB Crude Oil Double Short
For more on ETFs, click
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