Market Overview

Consider This Leveraged Retail ETF In March

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Consider This Leveraged Retail ETF In March
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Many investors believe the fourth quarter is the best time to embrace retail stocks and the related exchange traded funds (ETFs). Some data points suggest March is a fine time to consider the sector as well.

For example, the SPDR S&P Retail ETF (NYSE: XRT), the largest retail ETF, is usually an impressive performer in the third month of the year. The equal-weight XRT averages a March gain of 4.41 percent and March is usually the best month of the year for the retail ETF.

Knowing that, aggressive traders may want to consider the Direxion Daily Retail Bull 3X Shares (NYSE: RETL) in the month ahead. RETL attempts to deliver triple the daily performance of the S&P Retail Select Industry Index, the same benchmark XRT tracks.

More Than Just Seasonality

Various data points and studies suggest there is something to seasonal trends and trading, but market participants looking to gain the full effects of a seasonal trade should not hold leveraged ETFs for more than a day or two. Like any leveraged ETF, RETL is a short-term instrument, not a buy-and-hold investment. Fortunately, there are imminent catalysts for RETL that speak to using leveraged ETFs over short holdings periods.

To kick-off March, a spate of well-known retailers report earnings. On Thursday, March 1, American Outdoor Brands (NASDAQ: AOBC), Barnes & Noble, Inc. (NYSE: BKS), Best Buy Co., Inc. (NYSE: BBY), The Gap, Inc. (NYSE: GPS), Kohl's Corp. (NYSE: KSS) and Nordstrom Inc. (NYSE: JWN) step into the earnings confessional.

On Friday, March 2, Big Lots Inc. (NYSE: BIG), Foot Locker, Inc. (NYSE: FL) and J.C. Penney Co., Inc. (NYSE: JCP) report earnings.

Already Some Interest

RETL's underlying index devotes 56.6 percent of its weight to specialty retailers and 19.2 percent to Internet retailers, according to issuer data.

Over the past 30 days, RETL is averaging daily inflows of about $31,300, according to Direxion.

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Posted-In: Earnings Long Ideas News Sector ETFs Specialty ETFs Retail Sales Markets Trading Ideas

 

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