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3 ETFs That Could Benefit From Apple's Downbeat Guidance

February 18, 2020 12:32 pm
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3 ETFs That Could Benefit From Apple's Downbeat Guidance

Today could be a rough one for Apple (NASDAQ:AAPL). Late Monday, the iPhone maker withdrew guidance for the current quarter, citing issues related to COVID-19, the new coronavirus from China.

Apple factories in China were shuttered in the wake of the epidemic and while some have recently started to come back online, the weeks spent closed mean a massive amount of lost production, including the iPhone 11.

“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” said Apple in a release issued Monday. “As a result, we do not expect to meet the revenue guidance we provided for the March quarter due to two main factors.”

For active traders, some of the following exchange-traded funds will be worth considering today and perhaps over the course of this week.

Direxion Daily Technology Bear 3X Shares (TECS)

The Direxion Daily Technology Bear 3X Shares (NYSE:TECS) has not been the leveraged way of playing the technology sector in recent months simply because the group continues adding to gains, compounding the woes of those that dare short it.

However, the bearish TECS could have its day, or two, this week because the Technology Select Sector Index, the index TECS looks to deliver triple the daily inverse returns of, devotes more than 19% of its weight to Apple.

“While our iPhone manufacturing partner sites are located outside the Hubei province — and while all of these facilities have reopened — they are ramping up more slowly than we had anticipated,” according to Apple.

That's a good reason right there to give TECS a look over the next few days.

Direxion Daily Semiconductor Bear 3X Shares (SOXS)

An array of semiconductor firms are members of the Apple supply chain, making the Direxion Daily Semiconductor Bear 3X Shares (NYSE:SOXS) a somewhat predictable addition to this list. SOXS attempts to deliver triple the daily inverse performance of the PHLX Semiconductor Sector Index (XSOX).

There's also the issue of demand. Apple previously closed retail stores in China due to COVID-19, cutting off a prime source of product demand, which could temporarily crimp Apple's chip suppliers.

“The second is that demand for our products within China has been affected. All of our stores in China and many of our partner stores have been closed,” according to Apple. “Additionally, stores that are open have been operating at reduced hours and with very low customer traffic.”

The company added that ex-China demand remains robust.

Direxion Daily S&P 500 Bear 3X Shares (SPXS)

With Apple being the largest individual component in the S&P 500 and technology being the index's biggest sector exposure, the Direxion Daily S&P 500 Bear 3X Shares (NYSE:SPXS) could offer some upside potential over the next couple of days.

Important to the SPXS thesis, as well the other leveraged funds highlighted here, is that in the aforementioned statement published by Apple, the company didn't specify exactly what its new guidance for the current quarter is.

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