The Best ETFs for the fourth quarter

Monday marks the first day of fourth-quarter trading, and investors may want to kick off the final stretch of the year looking to an ETF that might fly under the radar, according to one technical analyst.

Ari Wald, head of technical analysis at Oppenheimer, likes the PowerShares S&P 500 High Beta Portfolio ETF. The ETF would offer diversity in a portfolio, Wald noted Friday on CNBC's "Power Lunch."

Looking at the charts, the ETF in which top holdings include Chesapeake Energy, Williams Companies and Freeport-McMoRan, has "breakout potential."

"We think the market as a whole is setting up for what should be a strong fourth quarter, a sentiment-induced rally," Wald noted, and said cyclical ETFs would also be good buys.

High beta stocks tend to move alongside the market and with greater volatility, so a high-beta ETF is only fit for market bulls, a group among which Wald counts himself.

Erin Gibbs, equity chief investment officer at S&P Global, has her eyes on the technology ETF, the XLK.

"Technology has obviously been the leader for Q3, but we really see it continuing in Q4," Gibbs said Friday on CNBC's "Power Lunch."

Gibbs notes strong earnings growth in technology stocks and that the sector trades at a lower valuation than the overall market.

Apple, the largest component in the tech ETF, releases its fourth-quarter earnings on October 27. Microsoft, another holding in the XLK, announces its quarterly earnings on October 20.


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Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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