This article was originally published on ETFTrends.com.
The technology sector has been one of the main propellers helping to lift the stock market to new heights, but lately, it's been the shorts who are flying high thanks to a post-Labor Day Weekend sell-off that the sector has been seeing the last two trading sessions.
TECL and TECS gives bold traders the alternative to go long or short with triple the leverage, depending on activity within the tech sector. Right now, it's the short on top as TECS is up 3.12% as opposed to TECL, which is down 3.20% as of 2:30 p.m. ET.
TECL seeks daily investment results equal to 300% of the daily performance of the Technology Select Sector Index. The fund invests at least 80% of its net assets (plus borrowing for investment purposes) in securities of the index, ETFs that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index. The index includes domestic companies from the technology sector. It is non-diversified.
TECS seeks daily investment results worth 300% of the inverse of the daily performance within the Technology Select Sector Index. To accomplish this, TECS invests in swap agreements, futures contracts, short positions or other financial instruments thatprovide inverse or short-leveraged exposure to the index. The index is provided by S&P Dow Jones Indices and includes domestic companies found within the technology sector.
The strength in tech has been evident during this extended bull market with TECL seeing year-to-date performance numbers from Yahoo! Finance of 25.65%, while it's returned 72.95% the past 12 months and 56.01% the last three years. Can tech sustain its run or is the recent sell-off an early sign of prolonged weakness?
Wednesday’s trading session saw signs of a post-Labor Day Weekend sale in the technology sector, causing the Nasdaq to lose 1.19% and tech ETFs to plummet. Shares of Facebook and Twitter also slumped as their chief executives, Jack Dorsey and Sheryl Sandberg, faced Congress to answer a battery of questions on preventing foreign influence operations in elections and abuse on social media platforms.
“When you have these corporate executives dragged to Congress, that makes the market more nervous,” said Robert Pavlik, chief investment strategist at SlateStone Wealth. “That’s why you’re seeing the market take more of a wait-and-see approach on these stocks.”
The Nasdaq experienced its worst drop since Aug. 15 as the Justice Department said Attorney General Jeff Sessions will meet with state attorneys general later in the month to discuss whether tech companies “may be hurting competition and intentionally stifling the free exchange of ideas on their platforms.”
As a result, TECS has jumped 7.2% the past two trading sessions, climbing past its 50-day moving average.
Is the music ready to stop playing in the tech sector or will it continue singing the same tune through the rest of 2018? Whatever the markets decide, traders can seek to profit with either TECS or TECL.
For more market trends in technology, click here.
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