Daily ETF Roundup: UNG Soars On Weather Forecast, GDX Tumbles As Gold Falters

by on November 17, 2011

Yet another down day for the Street as investors try to strafe fears from the euro zone as well as U.S. worries. Though there was no single event that sent stocks into the gutter, it seems that profit taking for an uncertain future went into effect. Overall, the Dow lost 134 points and the S&P sank about 1.7%; two straight days of heavy losses. Gold, the recently correlated precious metal, saw its price drop by a crushing 3%, as the safe haven metal has been slowly losing its luster. Finally, the big loss on the day came from oil, which saw its price dip by nearly $4/barrel as prices calmed down after yesterday’s surge [see also Gold And Silver In A Correlation Bubble?].

There is much speculation that the sell-off, which intensified as the day progressed, was fueled by the S&P crossing a crucial mark. Once the index fell below $1,225, investors ran for the hills, creating something of a perpetuating sell-off, as investors began to dump assets due to the heavy losses that simply stemmed from others doing the same. The U.S. has just days left to make a decision on its important budget cuts, but all news points to the “Super Committee” getting nowhere quickly, which has caused many to worry. After all, it was in August, when an agreement was reached just in the nick of time, that saw stocks experience a recession-like sell off period. Amid market volatility, we outline two of the most notable ETF performances on the day [see also 25 Ways To Invest In Silver].

One of the biggest ETF winners on the day came from the United States Natural Gas Fund LP (UNG) which tacked on 2.7%. The boost in price can be attributed to several different factors. For starters, predictions of cold weather points to a high demand for natural gas in the coming days, pushing UNG’s price higher. Another factor can simply be that natural gas has been so cheap as of late. Despite a brief boost several weeks ago, natural gas has been beaten down, evidenced by UNG’s near 35% losses on the year. Today’s gain could have simply come from investors buying in at a low with the hopes that UNG has a steep upside potential [see also Beyond UNG: Three Intruiging ETFs To Play Natural Gas].

One of the biggest ETF losers on the day came from the Market Vectors TR Gold Miners ETF (GDX). This ETF tracks the performance of some of the most popular gold miners in the world, including Barrick Gold and Kinross. As gold took a tumble today, GDX fell even further due to the fact that mining firms often have high betas and make them something of a leveraged play on their underlying metal. GDX tumbled 4% and saw its daily volume jump to 18.6 million, around four million higher than average [see also Three Reasons Why Gold Is Overvalued].


Disclosure: No positions at time of writing.