Market Overview

Survive The Summer With These ETFs (PEJ, NUGT, FBT)

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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 (NYSE: 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 our thesis right that this ETF can easily deliver double-digit gains in less than a week.

First Trust NYSE Arca Biotech Index Fund (NYSE: 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 we 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 Pharamceuticals (Nasdaq: 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 (NYSE: 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 (NYSE: T) and Verizon (NYSE: 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 (NYSE: IYZ) over the past month and year-to-date.

PowerShares Dynamic Leisure & Entertainment Portfolio (NYS: 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 (Nasdaq: PCLN) and Walt Disney (NYSE: 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.

Posted-In: Long Ideas News Sector ETFs Broad U.S. Equity ETFs Short Ideas Specialty ETFs Futures Commodities Best of Benzinga

 

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