Daily ETF Roundup: GDX Soars On Gold’s Glitter, SPY Drags On Weak Markets

by on May 17, 2012 | ETFs Mentioned:

Today was another dismal trading day with markets selling off viciously as the session came to a close. The Dow lobbed off 156 points and the S&P 500 sank by about 1.5%. That marks 11 losing days out of the last 12 for the Dow. Benchmarks were extremely skittish today as it seems more and more likely that Greece will be exiting the euro zone, spooking many that a full-fledged global crisis is just around the corner. Tech investors were also notified that tomorrow’s Facebook IPO (FB) will be priced at $38 per share, as many debate over whether or not they will be buying in or shying away [see also Which ETFs Will Own Facebook (And When)].

On the commodity side of the equation, gold finally saw an up day, as its price finally broke out of its rut. Crude oil, on the other hand, remains in the doldrums as it approaches $90/barrel. Crude has dipped by about 12% in just two weeks, begging the question of when it will turn things around and when investors will be safe to make a buy. With such a hectic day in trading, investors may be left scratching their heads, trying to make sense of why certain securities behaved the way they did. In an effort to keep our readers educated on financial markets, we outline two of the biggest ETF movers on the day [see also Three Reasons Why Gold Is Overvalued].

Today’s big ETF winner was the Market Vectors TR Gold Miners ETF (GDX) which jumped a full 4.5%. Gold futures were able to gain around 2.5%, allowing this mining fund to take advantage. Gold’s gains were largely attributed to technical buying as it had been sitting at lows for some time. As is the case with most mining equities, GDX represents something of a leveraged play on the precious metal, as its underlying holdings have high betas, allowing the fund to move big in either direction depending on the behaviors of gold.  The ETF is down about 19% on the year, but saw some positive momentum today as it doubled its ADV [see also Is Gold Still A Safe Haven?].

One of the biggest ETF losers came from the king of ETFs, the SPDR S&P 500 Fund (SPY), which sank by 1.5%. The sell-off in this fund was largely sparked by more Greek drama, which refuses to subside. Many believe that without another rescue package (which would be the third) “Greece will likely default and be forced to leave the 17-country euro zone, which would destabilize other countries that use the euro” writes Pallavi Gogoi. SPY’s daily volume spiked by more than 50% today as traders were actively exiting their positions in the world’s largest exchange traded product [see also 3 ETF Trading Tips You Are Missing].

Follow me on Twitter @JaredCummans

Disclosure: No positions at time of writing.