Traders Embrace This Retail ETF
Last year, traditional retailers were being left for dead. While myriad issues, not the least of which is the competitive threat from e-commerce, still linger for brick-and-mortar retailers, price action says 2018 is marking a resurgence for the group.
On Monday, one of the three exchange traded funds (ETFs) hitting all-time highs was a retail fund and the S&P Retail Select Industry Index is within striking distance of 52-week highs.
What Happened
The recent retail ebullience is driving the Direxion Daily Retail Bull 3X Shares (NYSE: RETL) higher. RETL, the dominant name among leveraged retail ETFs, attempts to deliver triple the daily returns of the S&P Retail Select Industry Index. RETL was one of the best-performing leveraged ETFs in the second quarter.
The fund gave back some of those gains Monday, but remains one of Direxion's best-performing leveraged bullish ETFs on a month-to-date basis.
“Spending at retailers — excluding automobiles, gasoline stations and restaurants — is predicted to climb at least 4.5 percent, the National Retail Federation said Monday, giving an updated outlook for the remainder of the year. That's compared with a prior forecast range of 3.8 to 4.4 percent,” reports CNBC.
Why It's Important
Data suggest traders have recently been displaying some enthusiasm for the triple-leveraged RETL. Volume in RETL has been higher than normal over the past several days and over the past month, traders have been allocation an average of nearly $148,000 per day to the fund, according to issuer data.
RETL's underlying index devotes about 59 percent of its weight to specialty retailers while Internet and multi-line retailers combine for 29 percent.
What's Next
While second-quarter earnings season is winding down, RETL could be a valid earnings this week as several marquee members of the S&P Retail Select Industry Index step into the earnings confessional. That index is up 10.10 percent since the tart of the third quarter.
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