The technology sector, the largest sector weight in the S&P 500, was hot. Until it wasn't.
After climbing steadily throug the first month and change of 2017, the sector closed June down just about 5 percent for the month, erasing most of May's gains.
While many exchange traded funds will suffer as technology stocks languish, some will profit. That includes the Direxion Technology Daily 3X Bear Shares (NYSE: TECS), which underscoring the potential potency of leveraged ETFs with several days of big gains through the month. In particular, after a note from Goldman Sachs questioned the valuations of large-cap tech on June 9, the fund followed that with a Monday gain of almost 3 percent on volume that was more than 11 times the trailing 90-day average.
TECS attempts to deliver triple the daily returns of the Technology Select Sector Index. Apple Inc. (NASDAQ: AAPL), Microsoft Corp. (NASDAQ: MSFT) and Alphabet Inc. (NASDAQ: GOOG) combine for over 35 percent of that index. In other words, when those stocks fall, owning TECS over an intraday period can be very rewarding.
In recent weeks, investors have been devoted to technology stocks and ETFs, though that theme is showing signs of reversing. TECS has bullish counterpart, the Direxion Daily Technology Bull 3X Shares (NYSE: TECL). Over the past month, TECL has averaged daily inflows of just over $266,000, according to Direxion data.
Still, other data points suggest some traders were prepared for the tech sell-off. The Direxion Daily Semiconductor Bear 3X Shares (NYSE: SOXS) has averaged daily inflows of about $426,000 over the past 30 days, according to Direxion data. Semiconductor stocks account for 14.3 percent of the index TECL and TECS track.
Active traders considering ETFs such as SOXS, TECL and TECS, can consider the following statistics and make of it what they will. Of the 101 S&P 500 members that are up at least 20 percent year-to-date, 31 are technology or Internet stocks.
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