The equities market is headed into its worst month of the year, and exchange traded fund investors should take particular care with financial sector stocks.
According to MKM Partners market technician Jonathan Krinsky, over the past decade, June has been the worst month of the year for stocks, with the S&P 500 averaging a 1.32% decline, and financial stocks have lead the weakness, reports Tomi Kilgore for MarketWatch. [June is the Worst Month for Stock, Equity ETFs]
Specifically, the Financial Select Sector SPDR (NYSEArca: XLF), which tracks financial stocks from the S&P 500, has lost more than 3% on average over the past 10 Junes.
Investors can also hedge the financials sector through various levels of leveraged inverse strategies. For instance, the ProShares Short Financials ETF (NYSEArca: SEF) takes the single inverse or -100% of financial stocks, while the ProShares UltraShort Financials (NYSEArca: SKF) takes a leveraged -200% of financials. Additionally, for -3x or -300% performance, there are the ProShares UltraPro Short Financials (NYSEArca: FINZ) and Direxion Daily Financial Bear 3X Shares (NYSEArca: FAZ).
Additionally, Krinsky pointed out that consumer discretionary sector was the next worst performer, with the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) averaging a decline of almost 2.5%, followed by a little over 2% drop in Industrial Select Sector SPDR (NYSEArca: XLI) and Materials Select Sector SPDR (NYSEArca: XLB).