The Hot List: 3 Gold ETFs for Short Term Traders
In many ways, the world of exchange-traded funds resembles the world of stocks when it comes to edges heading into midweek. Whether it is Europe fatigue or simply traders and investors taking a breather after the stock market’s major October run, profoundly neutral trading conditions define the current environment for traders.
One area where edges to seem to be developing, at least among ETFs, is among precious metals related exchange-traded funds. Today’s Hot List takes a look at some of the gold and/or precious metals based ETFs that have begun to move toward levels from which reversals have historically been the near-term outcome.
First up is the Market Vectors Gold Miners ETF (GDX). GDX includes among its top holdings mining stocks like Yamana Gold Inc. (AUY) and Barrick Gold (ABX). Shares of GDX reversed by less than 1% in Tuesday’s session, pulling back from overbought territory where the ETF has spent three out of the past five trading days.
That said, coming into trading on Tuesday with a “consider avoiding” rating of 2 out of 10, GDX could still be vulnerable to further selling.
Traders looking for a leveraged way to back a bet on gold may want to consider the DB Gold Double Long ETN (DGP). DGP is built to track twice the daily return of the Deutsche Bank Liquid Commodity Index – Optimum Yield Gold Excess Return – and is one of a number of long, leveraged assets (the ProShares Ultra Gold ETF or UGL, is another) that give traders more exposure to both potential upside and downside. Heading into trading on Wednesday, shares of DGP is pulling back from new, short term closing highs, finishing lower by more than 1%.
With the relative strength in gold-related funds, it is no surprise to see that short gold ETFs and ETNs are among our higher rated funds and notes at midweek. An example of this is the “consider buying” rating of 8 out of 10 for the ProShares UltraShort Gold ETF (GLL).
Even with a gain on Tuesday of more than 1%, shares of GLL are trading at their lowest levels since the major lows in early September. In fact, GLL has only closed higher for three out of the last 13 trading days.
All of the stocks and exchange-traded funds in today’s report were available from research and data available through PowerRatings. To learn more, click here.
David Penn is Editor in Chief of TradingMarkets.com