Looking for a way to play some downward pressure on metals? Rather than taking a stab at an individual stock, some traders look to trading instruments that use groups of companies or similar that typically move exponentially compared to individual components or the broad markets. These are easily identified by acronyms like “ETF” (exchange traded fund), “Ultra” or “3X,” letting the trading community know they are leveraged, funds, etc.
For example, as the Dow Jones Industrial Average clings to gains on the day Tuesday morning, New York Stock Exchange-listed plays are being mostly led by downside plays. In fact, four of the top ten percentage gainers so far on the day are commodity-based instruments with betting on the downside. In fairness, it should be noted that the DB Base Metals Short ETN (exchange traded note) (NYSE:BOS) has only one trade that has made the price jump $1.59, or 9.29%, to $18.71.
The other plays moving upward because of a bear thesis towards metals during this morning’s session are: ProShares UltraShort Silver (NYSE:ZSL), which is up 5.35% to $33.30; Direxion Daily Junior Gold Miners Index Bear 3X Shares (NYSE:JDST), which has added 4.7% to $66.05; and Direxion Daily Natural Gas Related Bear 3X Shares, which has climbed 4.58% to $44.39.
Why the moves, you may ask? Because December contracts for gold (the most actively traded currently) are down by 1.08% at $1,276.50 and September silver contracts (again, the most actively traded) are lower by 2.9% at $16.62. September copper futures are off by 0.62% at $2.8865. September contracts for natural gas have slid 0.41% to $2.947.
As a reminder, though, the ProShares and 3X’s that are up will change directions like David Rice in “Jumpers” if for one reason or the other the bulls start imposing their will on metal futures.
