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6 Leveraged ETFs to Play Trade, Oil and Shutdown Hopes

Sanghamitra Saha

U.S.-China trade tensions unexpectedly brought the much-needed short relief for Wall Street. President Donald Trump said he might extend the deadline for new tariffs on China, if negotiations between the two countries get somewhere. Both parties are currently in the middle of a 90-day partial trade truce, which is due to end on Mar 1 (read: U.S.-China Trade Talks Begin: 5 Safe ETFs to Follow).

Things are shaping up in the oil patch this year. Oil recovered from a two-week low on Feb 12 after Saudi Arabia pledged to deepen output cuts. Saudi Energy Minister Khalid Al-Falih informed that that the kingdom will keep curbing output more than required by a deal cut in December among top producers. Notably, a fresh output cut decision by OPEC and Russia was taken in December for the first six months of 2019 (read: 5 Reasons Why Oil Saw the Best January: 5 ETF Winners).

Also, on Jan 28, the Trump administration imposed sweeping sanctions against Venezuelan state-owned oil firm Petróleos de Venezuela, S.A. due to political issues. Both factors offered United States Oil USO 1.4% gains on Feb 12 and 15.5% gains year to date (read: US Sanctions Against Venezuela? ETFs to Top & Flop).

In the United States, investors were fearing a second government shutdown after a 35-day one happened recently. There were clashes between Democrats and Republicans on funding a $5.6 billion wall along the Mexico border. However, Trump has said he may sign a proposed border security deal and avert a second shutdown although he’s unhappy with the agreement (read: Second Shutdown Seems Unlikely: Pick High Beta & Momentum ETFs).

If these were not enough, the Fed has been offering a dovish tone since the start of this year. So, hopes of a few more months of cheap money inflows should keep the stock market on a tear.

Below we have highlighted five ETF areas that could offer stellar gains in the coming days. These funds should continue to be investors’ hot-favorite provided the sentiments remain the same.

Nasdaq

ProShares UltraPro QQQ TQQQ is a triple-leveraged Nasdaq-100 ETF, while ProShares Ultra QQQ QLD offers 200% of the daily performance of the NASDAQ-100 Index. TQQQ was up 4.3% and QLD added 3% on Feb 12.

S&P 500

ProShares Ultra S&P 500 SSO corresponds to twice (200%) the daily performance of the S&P 500, while Direxion Daily S&P 500 Bull 3X Shares SPXL offers 300% of the S&P 500. SSO gained 2.6% while SPXL was up 3.9% on Feb 12.

Dow Jones

ProShares UltraPro Dow30 UDOW intends to correspond to triple (300%) the daily performance of the Dow Jones Industrial Average, while ProShares Ultra Dow30 DDM looks to offer twice the daily performance of the Dow Jones Industrial Average. UDOW gained 4.3% and DDM was up 2.9% on Feb 12.

Oil & Energy

Direxion Daily Energy Bull 3X ETF (ERX) tracks 300% of the performance of the Energy Select Sector Index. ProShares Ultra Bloomberg Crude Oil (UCO) corresponds to twice the daily performance of the daily performance of the Bloomberg WTI Crude Oil Subindex. ERX was up 3.6% and UCO gained about 2.9% on Feb 12. 

China

Any trade truce or delay in further flare-ups in tensions is likely to bode well for Chinese stocks. The fund Direxion Daily China 3x Bull Shares YINN offers 300% of the performance of the FTSE China 50 Index, which consists of the 50 largest and most-liquid public Chinese companies currently trading on the Hong Kong Stock Exchange. The fund was up 0.5% on Feb 12.

Semiconductor

Per Morgan Stanley equity strategists, “semiconductor and semiconductor equipment companies have the highest revenue exposure to China at 52%” and are thus exposed to maximum risks on rising trade tensions.  A cessation in trade dispute is expected to favor Direxion Daily Semiconductor Bull 3x Shares SOXL, which gives exposure to 300% of the performance of the PHLX Semiconductor Sector Index. The fund added more than 6.3% on Feb 12.

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ProShares Ultra S&P500 (SSO): ETF Research Reports
 
Direxion Daily FTSE China Bull 3X Shares (YINN): ETF Research Reports
 
ProShares UltraPro QQQ (TQQQ): ETF Research Reports
 
ProShares Ultra Bloomberg Crude Oil (UCO): ETF Research Reports
 
Direxion Daily Energy Bull 3X Shares (ERX): ETF Research Reports
 
ProShares UltraPro Dow30 (UDOW): ETF Research Reports
 
Direxion Daily Semiconductor Bull 3X Shares (SOXL): ETF Research Reports
 
ProShares Ultra QQQ (QLD): ETF Research Reports
 
Proshares Ultra Dow30 (DDM): ETF Research Reports
 
Direxion Daily S&P 500 Bull 3X Shares (SPXL): ETF Research Reports
 
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