4 ETF Areas Likely To Stay Strong Entering 2017

The final week of 2016 ended on a soft note with the key U.S. equity gauges retreating. The S&P 500-based (SPY - Free Report) lost about 0.8%, Dow Jones-based ETF (DIA - Free Report) shed 0.7% and Nasdaq-100 based (QQQ - Free Report) receded over 1.3% in the last five trading sessions (as December 30, 2016). 

As per the Stock Trader's Almanac, Santa rally refers to the increase in stock prices in the final week of the calendar year (i.e. between Christmas and New Year’s Day) that extends into the first two days of the New Year. This time, Santa apparently couldn’t gift the broader markets hefty gains, though some corners stayed blessed and gained momentum just before entering the new year.

Below are four ETF areas that returned smartly in the last five trading sessions of 2016 while the broader market remained somber.

Gold Miners

The possibility of faster Fed policy tightening and the resultant strength of the greenback as well as a Trump rally led to a 13% drop in the metal in Q4 – marking “its second-worst quarter in 18 years” and “its worst quarter since the second quarter of 2013.”

However, the metal bounced back at the tail end of 2016 when Santa rally fizzled out on overvaluation concerns. Gold bugs enjoyed “their best day in nearly two months on December 29.” Since mining companies act as leveraged plays on underlying metal prices, metal miners tend to outperform ahead.

Several gold mining ETFs like Global X Gold Explorers ETF (GOEX - Free Report) ,VanEck Vectors Junior Gold Miners ETF GDXJ), ALPS Sprott Junior Gold Miners ETF (SGDJ - Free Report) and PowerShares Global Gold & Precious Metals ETF (PSAU - Free Report) added around 10% or more returns in the last five days of 2016.


Among the soft commodities, sugar prices have been on a tear lately. India, one of the world’s largest sugar producers, is also expected to see an uptick in prices on a rise in the cost of production. “As per the international sugar organization, the 2015-16 season is expected to see the steepest fall in sugar production.”

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