Market Overview

Traders Embrace This Retail ETF

Traders Embrace This Retail ETF

Last year, traditional retailers were being left for dead. While myriad issues, not the least of which is the competitive threat from e-commerce, still linger for brick-and-mortar retailers, price action says 2018 is marking a resurgence for the group.

On Monday, one of the three exchange traded funds (ETFs) hitting all-time highs was a retail fund and the S&P Retail Select Industry Index is within striking distance of 52-week highs.

What Happened

The recent retail ebullience is driving the Direxion Daily Retail Bull 3X Shares (NYSE: RETL) higher. RETL, the dominant name among leveraged retail ETFs, attempts to deliver triple the daily returns of the S&P Retail Select Industry Index. RETL was one of the best-performing leveraged ETFs in the second quarter.

The fund gave back some of those gains Monday, but remains one of Direxion's best-performing leveraged bullish ETFs on a month-to-date basis.

“Spending at retailers — excluding automobiles, gasoline stations and restaurants — is predicted to climb at least 4.5 percent, the National Retail Federation said Monday, giving an updated outlook for the remainder of the year. That's compared with a prior forecast range of 3.8 to 4.4 percent,” reports CNBC.

Why It's Important

Data suggest traders have recently been displaying some enthusiasm for the triple-leveraged RETL. Volume in RETL has been higher than normal over the past several days and over the past month, traders have been allocation an average of nearly $148,000 per day to the fund, according to issuer data.

RETL's underlying index devotes about 59 percent of its weight to specialty retailers while Internet and multi-line retailers combine for 29 percent.

What's Next

While second-quarter earnings season is winding down, RETL could be a valid earnings this week as several marquee members of the S&P Retail Select Industry Index step into the earnings confessional. That index is up 10.10 percent since the tart of the third quarter.

Related Links:

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Russia Leveraged ETFs See Volume Spike.

Posted-In: Direxion ETFLong Ideas News Sector ETFs Trading Ideas ETFs


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