Markets

Top Leveraged/Inverse ETFs of Last Week

Wall Street witnessed moderate movement last week with the S&P 500 and the Nasdaq gaining about 0.7% and 2.7%, respectively, and the Dow Jones showing no movement. While the reopening of economies boosted risk-on sentiments,the Fed’s somber outlook on the coronavirus-stricken economy gave it a boost.

On policy matters, the Fed committee members expressed skepticism over using bond purchases to control the government bond yield curve, per CNBC. As a result, post meeting, the benchmark 10-year U.S. treasury yield gained by one bps to 0.68% on Aug 19 from a day earlier. The yield on two-year treasuries was steady at 0.14%. Overall, the yield curve slightly steepened on Aug 19.

Against this backdrop, below we highlight a few leveraged/inverse ETF areas that won big time last week.

FANG+

The tech and communication sector is a coronavirus winner. Social distancing triggered by the coronavirus outbreak has benefited communications and activities over Internet in recent months. Top mutual funds continue to invest heavily in the tech sector, per Investor’s Business Daily.  

Apple AAPL crossed the $2 trillion market cap for the first time ever last week. This has made the technology giant the first U.S. company to reach this level after more than doubling in five months. Other FANG components also rose meaningfully. MicroSectors FANG+ Index 3X Leveraged ETN (FNGU(up 24.6%) and MicroSectors FANG+ Index 2X Leveraged ETN FNGO (up 16%) gained the most in this segment.

Homebuilders

The housing sector has been gaining momentum lately. According to the U.S. Housing and Urban Development and Commerce Department, total housing starts rose 22.6% (the biggest gain since October 2016) to a seasonally adjusted annual rate of 1.50 million units in July per a National Association of Home Builders’ (NAHB) press release. The figure is above June’s revised figure of 1.22 million units. The reading surpassed analysts’ expectations of 1.24 million units, per a Reuters’ poll.

Builder confidence for newly built single-family homes surged to 78 points in August from 72 in July, 58 in June, 37 in May and 30 in April (the lowest since June 2012). The metric also surpassed analysts’ expectations of a rise to 73 in the reading, per a Reuters’ poll. Direxion Shares Daily Homebuilders NAIL gained 14.23% past week.

Nasdaq 100

Optimism swept the broader market on Aug 17, with the S&P 500 briefly breaking the record close it had hit in February and the Nasdaq hitting a record high yet again. Decent earnings releases, hopes of an economic recovery in 2021, developments in vaccines and easy global monetary policies aided the market. The gains were primarily driven by mega-cap companies, especially the FAANG stocks. ProShares UltraPro QQQ (TQQQ) was up 10.9% last week.

Technology

Technology stocks and ETFs have been star performers of this year. The coronavirus outbreak could not take the sheen out of this sector, rather added more to it. Social distancing norms compelled people to stay at home, binge on online shopping and work as well as learn from home. The key tech stocks put up a strong show last week.

The trend continued in funds too with Direxion Daily Technology Bull 3X Shares TECL and Direxion Daily Dow Jones Internet Bull 3X Shares (WEBL) and ProShares Ultra Technology ROM adding 10.7%, 10.3% and 7.7%, respectively, last week.

China

China stocks were volatile last week. Though the segment posted considerable losses on U.S. tensions last week, it rebounded. Once again, the tech sector was the winner. Direxion Daily CSI China Internet Bull 2X Shares CWEB (up 8.6%) andDirexion Daily FTSE China Bull 3X Shares (YINN) (up 7.5%) caught attention last week.

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Direxion Daily CSI China Internet Index Bull 2X Shares (CWEB): ETF Research Reports

ProShares UltraPro QQQ (TQQQ): ETF Research Reports

Direxion Daily FTSE China Bull 3X Shares (YINN): ETF Research Reports

Direxion Daily Technology Bull 3X Shares (TECL): ETF Research Reports

Direxion Daily Homebuilders Supplies Bull 3X Shares (NAIL): ETF Research Reports

ProShares Ultra Technology (ROM): ETF Research Reports

MicroSectors FANG Index 3X Leveraged ETN (FNGU): ETF Research Reports

MicroSectors FANG Index 2X Leveraged ETN (FNGO): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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