Also, ETFs on commodities will either overperform or underperform depending on whether the underlying commodity futures market is in backwardation (downward sloping futures price curve) or cantango (upward sloping price curve).

Assuming a long commodity ETF needs to maintain a hedge that reflects the goals of the long commodity fund, the ETF uses futures (or swaps whose pricing depends on futures) to place a long position on the commodities. To maintain the long hedge, the ETF rolls forward into the next month each month by selling the front month futures contracts to buy next month futures. if the curve is upward sloping and the fund is long the commodity, this means the fund sells low to buy high every month (or every couple of months depending on the contract maturities they trade)

A high volatility has a depressing effect on both short and long leveraged ETF’s. This can be massive if volatility is very high. Likewise a relatively low volatility raises both short and long leveraged ETF’s. I believe the point at which the net effect is about zero for the S&P 500 is when its volatility index is about 20 (don’t know about other indexes).
(http://finance.yahoo.com/q?s=^vix)

About momentum: apparently if a (short or long) leveraged ETF is making profit (its stock price is going up), the leverage is increased and vice versa.

Thus: best case scenario for (short and long) leveraged ETF’s: a steady increase of its price under low volatility. Worst case scenario: a non-directional market with high volatility.