3 Leveraged ETFs for August (DUG, SOXS)

The month of August does not have the best reputation. In fact, the eighth month of the year has been the worst for the S&P 500, Dow Jones Industrial Average and the Nasdaq since 1987, according to the Stock Trader's Almanac. If the first two days of the month are any indication, traders and investors could be in for a rough ride this month. On the other hand, this is an election year and stocks have a tendency to act a little better in August of an election year. Plus, the Federal Reserve, European Central Bank and the Peoples Bank of China could act to stimulate their respective economies. There is a lot of hope factoring into the August equation and hope is a dangerous tonic in the financial markets. A more prudent course of action might be

rather than hoping for salvation from central banks. Here are some of the ETFs that could deliver noteworthy returns in the coming weeks.

Using Intel

, the world's largest semiconductor maker, as the bellwether August is not the best of months of for chip stocks. Intel's performance over the past five Augusts is erratic at best and far from bullish. Intel is already off 3.3 percent in the past month while the Market Vectors Semiconductor ETF

is also in the red over the same time period. Making matters worse is the fact that the usual period of weakness for chip stocks does not even start until the middle of this month. SOXS is by no means a long-term hold, but a move above $40 and selling pressure on chip names could take this triple-leveraged play into the mid-$40s in the near-term.

As is the case with SOXS, the Direxion Daily Small Cap Bear 3X Shares is definitely a long-term hold. However, this triple-leveraged bearish small-cap fund is another valid August play. The iShares Russell 2000 Index Fund

, the marquee small-cap ETF that many pros follow as a gauge of risk appetite and strength in small-cap equities, also has spotty August-September track record in recent years. Beyond that, IWM has been showing signs of deflation in the past few days. If that ETF loses support just below $76, things could get ugly for IWM in a hurry. TZA could come up positive if small-caps are harshly repudiated this month.

The Energy Select Sector SPDR

was taken to the woodshed in August 2010 and August 2011. The U.S. and Chinese economies are sputtering, U.S. oil inventories are elevated and demand is slack. That is almost a perfect storm to entertain DUG for a weeks. Buyer beware, though. XLE has surged into October over the past two years. That scenario could easily repeat this year if U.S. economic data points start improving or if it appears as though Mitt Romney will defeat President Obama. For more on ETFs and seasonal trends, click

.