It was just a few weeks ago that investors were put on red alert that a rough September was in the offing.
That has not been the case this month as September's reputation for being a dreadful month for the bulls is nearly out the window, particularly after last week saw U.S. stocks notch their best weekly performance since January.
The S&P 500 climbed 1.5 percent while Dow Jones Industrial Average surged 2.5 percent on news Alcoa (NYSE:AA), Bank of America (NYSE:BAC) and Hewlett-Packard (NYSE:HPQ) will be replaced in the index by Goldman Sachs (NYSE:GS), Nike (NYSE:NKE) and Visa (NYSE:V).
More importantly, there is a Federal Reserve meeting this week and this is the big one. The one where the central bank could and probably should announce some form of tapering to its quantitative easing efforts. That will be the issue on traders' minds until clarity is delivered when the meeting concludes Thursday.
Direxion Daily Gold Miners Bear 3X Shares (NYSE:DUST) Clearly, this is a trade for the adventurous because DUST is a volatile, triple-leveraged ETF. With a tapering announcement looming, bearish positions on precious metals make sense. The wind has come out of the recent rally in gold and silver ETFs and the miners are again being taken to task.
Despite an impressive August rally, the Market Vectors Gold Miners ETF (NYSE:GDX) could not break through the $31-$32 area and make a run to reclaiming its 200-day moving average. That is one failure an the other is that GDX, which lost 8.5 percent just last week, have given back nearly all of its August gains. Bad news for those bullish on miners, but great news for DUST.
PowerShares NASDAQ Internet Portfolio (NASDAQ:PNQI) Internet ETFs were in focus last week on news of the Twitter IPO, but there is a more important story to be heard with PNQI and rival funds.
And yes, the story involves more than just the resurgence of Facebook (NASDAQ:FB). Internet ETFs, including PNQI, have been touching new all-time highs on a regular basis. The even better news is that these funds' fortunes are not intimately correlated to tapering, regardless of what the Fed does.
In fact, Internet stocks and the ETFs that house them have proven relatively immune to rising interest rates, increasing the allure of this sub-sector in a post-tapering world.
iShares MSCI China ETF (NYSE:MCHI) Scores of U.S.-focused ETFs have legacies of trade-worthy seasonality, but there is an interesting seasonal trend with China ETFs that has not gotten much attention. Over the last three years, select China ETFs have started rallies in mid- to late September that have lasted anywhere from into November, into year-end or into the following year.
That is something to keep an eye on as emerging markets equities continue to perk up and investors embrace compelling valuations on Chinese shares.
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