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5 ETFs Strategies to Play in November

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November kicked off on a solid note after a solid October rally. Better-than-expected corporate earnings boosted the U.S. stocks, with the S&P 500 and the Nasdaq recording their best month since November 2020.

The S&P 500 is up about 23.3% this year. In past years, when the S&P 500 was up more than 20% in the first 10 months of the year, the performance in November and for the remainder of the year was positive every time, according to Bespoke Investment Group, as quoted on CNBC.

Historically, November has been upbeat in the stock market. According to, a consensus carried out from 1950 to 2020 has revealed that November ended up offering positive returns in 48 years and negative returns in 23 years, with an average positive return of 1.53%.

This year is unlikely to be an exception. While jitters may emanate from the occasional rise in virus cases and rising rates, strength may be added by more vaccinations, booster shots by Moderna (MRNA - Free Report) and the approval of an antiviral therapy of Merck (MRK - Free Report) , the economic reopening, the upcoming holiday season and last but not the least the earnings season.

As of Nov 1, according to FactSet, 55.8% of S&P 500 companies have reported quarterly financial results, with 82% beating earnings estimates. The Federal Reserve on Wednesday said it would start tapering its asset purchases.

However, investors seem prepared for the Fed tightening move. About 44% of the 25 respondents in a CNBC survey believe the Fed will hike rates by July, meaning that rate hikes will follow the end of taper by just a few months. If many investors are prepared for such an aggressive Fed move, then there is not much likely to happen on the front of fear-driven equity market slump (read: High Momentum ETFs to Buy on Wall Street's Winning Streak).

Against such a backdrop, let’s take a look at the ETFs that could be good picks in November.

Electric Vehicle to Gain More Speed

The ongoing global push for restoration of climate, President inclination for the same, emerging countries’ pledge for being carbon-neutral in the COP-26 Glasgow and the higher demand for alternative energy amid the fossil fuel rally are great for electric vehicle’s future (read: ETFs in Focus Post Dismal Amazon Q3 Results).

The month started with a massive Tesla rally (up about 8% on Nov 1). Rivian, the electric-vehicle start-up backed by Inc. (AMZN) (which has 20% stake in the start-up) and Ford Motor Co. (F), is seeking a roughly $54.6 billion valuation. If the target is achieved, the electric vehicle maker would be potentially almost as valuable as rival Honda Motor. It would make Rivian one of largest initial public offerings by funds raised in the past decade in the United States.

Global X Autonomous & Electric Vehicles ETF (DRIV - Free Report) , Simplify Volt RoboCar Disruption and Tech ETF (VCAR) and iShares Self-Driving EV and Tech ETF (IDRV) are some of the ETFs that could be beneficial in the month.

Consumer Discretionary to Gain on Holiday Season

The National Retail Federation (“NRF”) projects November/December retail sales in the range of $843.4 billion to $859 billion, up 8.5% to 10.5% from 2020 results. The NRF said its forecast — excluding automobile dealers, gas stations and restaurants and covering Nov 1 to Dec 31— beat the previous high of $777.3 billion, up 8.2%, in 2020 as well as the average gain of 4.4% over the past five years.

Deloitte forecasts considerably higher holiday sales for 2021, estimating growth of 7% to 9% to between $1.28 and $1.3 trillion during the November-to-January time span. That is more than Deloitte’s 1% to 1.5% projection for 2020 and the U.S. Census Bureau’s November 2020-to-January 2021 sales growth measure of 5.8% to $1.19 trillion (seasonally adjusted, excluding autos and fuel). A rally in SPDR S&P Retail ETF (XRT - Free Report) and VanEck Retail ETF (RTH) is in the cards.

Energy Rally Heating Up

Oil price has been on the rise in recent weeks with Brent oil hovering near its highest level since October 2018 and WTI crude near the highest since the start of August 2020. Tightening supply and improving demand fundamentals have been driving the prices higher. Oil analysts forecast a sustained rally in the liquid commodity as OPEC opposed calls to boost supply. With winter months approaching, an oil rally makes more sense. SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) is a great pick.

Travel & Tourism Industry to Fly Higher

Chances are high that reopening trade would gain steam in the fourth quarter bolstered by widespread vaccination and chances of more treatment opportunities. Travel and tourism stocks also benefitted after the Biden administration announced they would ease travel restrictions for vaccinated foreigners. Many investors see value in the sector, which was hard hit by the Delta resurgence this summer. ETFMG Travel Tech ETF (AWAY - Free Report) is good pick out here (read: Should You Invest in Travel & Tourism ETFs Now?).   

Are Small-Caps Inexpensive Bets?

The small-cap benchmark Russell 2000 rallied about 2.6% on Nov 1 for its best day since Aug 27. After a tough September in which the S&P 500 fell more than 4%, the benchmark jumped nearly 7% last month. The upcoming holiday season and upbeat sentiments in the market led to the rally. The Q3 earnings season for the S&P 600 is expected to be upbeat with 44.4% earnings gain (following 280% gains in Q2) on 16.1% revenue gain (over above 34.4% increase in Q2). SPDR S&P 600 Small Cap ETF (SLY - Free Report) has a Zacks Rank #2 (Buy). The fund has a P/E ratio of 15.53X versus 22.20X P/E possessed by SPDR S&P 500 ETF Trust (SPY).