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Amid Earnings, Some Love For Leveraged Bank ETF

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Amid Earnings, Some Love For Leveraged Bank ETF
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Second-quarter earnings season is already off and running, but the party really gets started today with a slew of reports from marquee names in the financial services sector, the second-largest sector weight in the S&P 500.

The financial services earning party does not end today, either. Consider Friday, July 13 a starting point for the sector's earnings reports because another avalanche of updates from big-name arrives next.

What Happened

Earnings seasons can be ideal times for leveraged exchange traded funds (ETFs) and since financials are being referenced here, the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) is one of the funds to consider.

FAS attempts to deliver triple the daily returns of the Russell 1000 Financial Services Index. The bearish equivalent, the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ), attempts to deliver triple the daily inverse returns of that benchmark.

Why It's Important

Today, JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C) and Wells Fargo & Co. (NYSE: WFC) delivered mixed results. While JP Morgan reported solid numbers that exceeded analyst expectations, Wells Fargo's 13 percent EPS miss caused a brief hiccup in all three bank's charts.

Those three stocks combine for nearly 15 percent of the Russell 1000 Financial Services Index's weight. Next week, five more of the benchmark's top 10 holdings step into the earnings confessional, including Bank of America Corp. (NYSE: BAC) on Monday and Morgan Stanley (NYSE: MS) on Wednesday.

While the financial services sector has been a disappointment this year, data suggest some traders are wagering the group will deliver for investors this earnings season. For the 30-day period ended July 11th, FAS saw average daily inflows of over $274,000, according to issuer data.

Conversely, the bearish FAZ averaged daily outflows of just over $152,000 over that period.

What's Next

For traders looking for more focused plays on the financial services sector, next week and the following week bring a spate of earnings updates from regional banks. The Direxion Daily Regional Banks Bull 3X Shares (NYSE: DPST) attempts to deliver triple the daily returns of the S&P Regional Banks Select Industry Index.

Starting today through July 25, each of the top 10 holdings in that regional bank index report earnings.

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Time For Earnings And Leveraged ETFs.

Posted-In: Earnings Long Ideas News Sector ETFs Short Ideas Pre-Market Outlook Trading Ideas ETFs

 

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