Daily ETF Roundup: GDX Gains On Gold’s Glitter, VXX Recedes On Market Strength

by on November 2, 2011 | ETFs Mentioned:

After a miserable start to the month, markets were able to rebound to put November back on track. The day saw the Dow top out at 1.53% while the S&P 500 added nearly 20 points. The NASDAQ and 10-year bonds also recovered the day after less-than-encouraging news from Europe hit markets hard. After it had been announced that Greece was working on a referendum regarding the bailout package, markets took a bitter nosedive as investors quickly sold out. Today also saw the FOMC interest rate release as well as a major speech from Ben Bernanke [see also 10 Strange But True Facts About The ETF Industry].

As we near the middle of the fourth quarter, investors are looking for another strong GDP growth to help bolster an economy that has been stuck in a rut for quite some time. With the holiday season approaching, consumption should see a nice uptick in coming weeks and may help to alleviate investor concern about the U.S. economy. For now, we outline two of the most notable ETF performances on the day to keep investors up to date with these wild markets [see also 25 Things Every Financial Advisor Should Know About ETFs].

One of the biggest ETF winners on the day came from the Market Vectors TR Gold Miners (GDX) which saw gains of 2.5% on gold’s strength. In a rather curious fashion, gold has been stuck in something of a correlation rut the past few sessions, as it moves parallel to major indexes. This pattern slaughtered the metal the past two days but worked to gold’s advantage for Wednesday’s session. GDX, a popular mining fund, represents something of a leveraged play on the precious metal as mining firms tend to have high beta scores. This explains why GDX outperformed GLD and gold itself on the day [see also Seven Reasons To Hate Gold As An Investment].

One of the biggest ETF losers on the day came from the S&P 500 VIX Short-Term Futures ETN (VXX), which receded by nearly 3.1%. The fund’s demise came from the strong markets, which were boosted by the Fed. Though rates were held steady, it was what the Fed didn’t say that helped markets. Chairman Ben Bernanke made no hint of another round of quantitative easing, suggesting that our economy is finally working itself off of the crutch we have so long supported it with. After last quarter’s robust GDP growth and the news that the Fed is finally content with where we are (at least for the time being), the outlook for the U.S. is strong, though it puts a fair amount of pressure on this VIX fund [see also ETFs To Smooth Volatility: Looking At Some Long / Short Options].

Disclosure: No positions at time of writing.