5 Top Inverse and Short ETFs for Traders
The longest bull market in history came to a screeching halt this year. The Nasdaq officially closed in bear market territory March 7 with the Dow and the S&P 500 still falling deeper into correction. Throughout this tumultuous start to the year, some of the Top 5 ETFs for Day Traders have been hit hard. But shorting individual stocks isn’t the only way to make money in a falling market. Inverse and short ETFs may be your better option. These funds are pinned to a specific index, just like QQQ tracks the Nasdaq and SPY tracks the S&P 500. But instead of tracking closely with the movement of that index, inverse and short ETFs move in the opposite direction. Most are also leveraged, meaning they deliver returns 2x or 3x what the index’s movement. Here are 5 top inverse and short ETFs for day traders: ProShares UltraPro Short QQQ (SQQQ) The ProShares UltraPro Short QQQ (SQQQ) is the short version of the Invesco QQQ Trust Series I (QQQ). Just like QQQ, this ETF tracks the performance of the Nasdaq 100. But instead of moving with the index, SQQQ moves in the opposite direction. The fund is also three times leveraged. If the Nasdaq 100 falls 2% in a session, SQQQ is meant to rise about 6%. But that leveraging is specifically weighted for a single session. ProShares warns traders “Due to the compounding of daily returns, holding periods of greater than one day can result in returns that are significantly different than the target return, and ProShares’ returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period.” The fund has an expense ratio of 0.95, average daily trading volume of more than 68 million shares and over $2.6 billion in net assets, at writing. ProShares UltraPro Short S&P 500 (SPXU) The ProShares UltraPro Short S&P 500 (SPXU) is a short ETF for the S&P 500. This fund aims to track the inverse movement of the benchmark index. SPXU is three times leveraged and comes with the same warning from ProShares as SQQQ. The company says this ETF “seeks a return that is -3x the return of its underlying benchmark (target) for a single day, as measured from one NAV calculation to the next.” The fund has an expense ratio of 0.9%, average daily trading volume of more than 27 million shares, and over $545 million in net assets, at writing. ProShares UltraShort 20+ Year Treasury (TBT) Proshares UltraShort 20+ Year Treasury (TBT) is the short version of TLT, which we covered in this post. The fund moves in the opposite direction of an index of U.S. Treasury bonds with remaining maturities of 20 years or more. TBT is two times leveraged, meaning it seeks a return that is double the inverse of the underlying benchmark. Just like all of the short/inverse ETFs we’ve covered so far, that leveraged return is intended for a single session. TBT has an expense ratio of 0.9%, average daily trading volume of more than 9 million shares, and nearly $1.2 billion in net assets, at writing. Direxion Daily Small Cap Bear 3x Shares (TZA) Although I included the Direxion Daily Small Cap Bear 3x Shares (TZA) in my Top 5 ETFs for Day Traders, it’s worth a repeat here. This fund tracks the Russell 2000 and is three times leveraged. The fund has an expense ratio of 0.94%, average daily trading volume of more than 21 million shares, and more than $359 million in net assets, at writing. Direxion Daily Semiconductor Bear 3X Shares (SOXS) Direxion Daily Semiconductor Bear 3X Shares (SOXS) is an industry specific inverse ETF. This fund tracks the ICE Semiconductor Index. The chipmaking industry has been hit hard by supply chain disruptions and major shortages as the economy reopens after Covid. And those issues have knocked down related stocks, benefiting traders of SOXS. The fund is three times leveraged and as with any leveraged fund, that return is intended for a single session. Direxion tells traders this ETF “should not be expected to provide negative three times the return of the benchmark’s cumulative return for periods greater than a day.” SOXS has an expense ratio of 0.95%, average daily trading volume of more than 51 million shares, and over $175 million in net assets, at writing. If you want more ideas of ETFs to trade, be sure to check out this post to learn more about the 4 Top Fintech ETFs to Watch!
Continue Reading -->Coffee With Greta: PCE Inflation Hits 40-Year High
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -27 (-0.1%) SPX Futures: -1 (-0.01%) NASDAQ Futures: +28 (+0.2%) Good morning friends! Futures are flat as the market gears up for the final day of Q1 and digests fresh economic data. Let’s get right to it! PCE Inflation Hits 40-Year High U.S. inflation pressures hit a fresh 40-year high in February. The Bureau of Economic Analysis’ Personal Consumption Expenditures (PCE) Price Index surged 6.4% year-over-year last month, the strongest annual gain since January 1982.. That was in-line with expectations and an increase from 6.0% in January. The Core PCE Price Index, which is the Fed’s preferred inflation measure, jumped 5.4% year-over-year, the biggest jump since April 1983. That was slightly cooler than the 5.5% gain economists were expecting but is still an increase from 5.2% in January. On a monthly basis, the headline price index rose 0.6% while the core price index rose 0.4%. The Fed expects PCE inflation to be at 4.3% by the end of this year and fall to 2.7% by the end of 2023. JPMorgan analysts now expect the Fed to raise rates by 0.5% at the May 4 meeting. Weekly Jobless Claims Rise More Than Expected Weekly jobless claims rose more than expected last week. The Labor Department reports 202,000 Americans filed initial claims for unemployment benefits. That was up 14,000 from the previous week and higher than expectations for 196,000. That was the first increase in three weeks. Continuing claims fell by 35,000 to 1.307 million vs 1.340 million expected. Biden to Order Historic Oil Reserve Release Oil prices are sliding as President Biden is expected to announce a plan to release oil from the U.S. strategic petroleum reserve (SPR) today. West Texas Intermediate crude futures are down more than 6% to $101 per barrel while Brent crude futures are down nearly 6% to $107 per barrel. Biden is set to deliver an address on his administration’s efforts to combat high energy prices at 1:00 p.m. ET. Several outlets are reporting his plan includes the release of 1 million barrels per day from the SPR, for several months. Goldman Sachs researchers said such a release would help the oil market rebalance in 2022 but would “ not resolve the structural supply deficit, years in the making.” The U.S. consumes, on average, 20 million barrels of oil per day. Meantime, OPEC+ met today and stuck to its modest production plans. The group voted to increase its output by 432,000 barrels per day starting May 1. OPEC+ has been slowly raising its output targets after the record supply cuts seen in 2020 due to Covid. Walgreens Earnings Walgreens Boots Alliance (WBA) shares are down 2.3% ahead of the open despite beating fiscal Q2 expectations. The drugstore chain reported adjusted earnings of $1.59 per share on $33.76 billion in revenue. That beat analysts’ expectations for adjusted EPS of $1.40 on $33.4 billion in revenue. Same-store sales in the U.S. jumped 14.7% year-over-year, the largest gain in more than 20 years. In the U.K., same-store sales surged 22% compared to a year ago. Walgreens reiterated its previous full-year guidance, expecting earnings growth in the low single digits. Apple Snaps Winning Streak Apple (AAPL) latest win streak was snapped on Wednesday as shares fell 0.7%. That was the iPhone maker’s first loss in 11 sessions. The 18.8% gain over those 11 days was the company’s longest win streak since 2003. The rally added $462 billion to Apple’s market cap, which stands at $2.92 trillion. AAPL shares are up 0.3% in premarket trade. The stock is back on “$3 trillion watch” after becoming the first company in U.S. history to briefly surpass that milestone on the first trading day of 2022. In Case You Missed It Private-sector job growth beat expectations in March. Payroll firm ADP reported private employers added 455,000 workers this month vs 450,000 expected. Small businesses added 90,000, mid-sized companies gained 188,000, and large businesses added 177,000. It was the slowest month of private job growth since August 2021 as the labor market nears full employment. Consumer confidence rose for the first time this year in March. The Conference Board’s consumer confidence index rose to 107.2 this month from February’s revised reading of 105.7. Confidence in current economic conditions rose 10 points to 153, the highest since July 2021. Expectations for the next 6 months fell to 76.6 from 80.8. Consumers’ inflation expectations for the next 12 months hit a record high at 7.9%.
Continue Reading -->Options In Play – Lining Up WMT
Trades come in all shapes and sizes, and even not every breakout pattern is exactly the same. Sometimes, I prefer to add on strength when something begins to work, as my confidence grows when the trade begins to move in my favor.
Continue Reading -->Coffee With Greta: Private Job Growth Beats Expectations
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -132 (-0.4%) SPX Futures: -19 (-0.4%) NASDAQ Futures: -91 (-0.6%) Good morning friends! Futures are slipping as the market digest fresh labor market data. Let’s get right to it! Private Job Growth Beats Expectations Private employers added more workers than expected in March. Payroll firm ADP reported the U.S. private sector added 455,000 jobs this month vs 450,000 expected. The leisure and hospitality sector led those gains, adding 166,000. The gains were spread evenly across businesses of all sizes. Those with 50 to 499 employees added 188,000 while companies with more than 500 workers added 177,000. Small businesses, those with less than 50 employees, added 90,000. Although the gain came in higher than expected, it’s the lowest since August 2021 as the labor market nears full employment. This comes after the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS) showed there were 11.27 million job openings in February. With just 6.27 million unemployed workers available to fill those positions, the labor gap hit a record high of 5 million. The Labor Department releases the official March jobs report Friday morning. That’s expected to show a gain of 490,000 workers with the unemployment rate falling to 3.7%. Oil Rebounds on Supply Concerns Oil prices are up today amid renewed supply concerns. West Texas Intermediate crude futures are up about 3% to over $107 per barrel while Brent crude futures are up 2.7% to over $113 per barrel. This comes after the American Petroleum Institute reported crude inventory in the U.S. fell by 3 million barrels in the week ending March 25. That was triple what analysts were expecting. Mortgage Rates Soar to 4-Year High Mortgage demand is tumbling as rates skyrocket. New data from the Mortgage Bankers Association shows the average 30-year contract rate jumped to 4.8% from 4.5% last week, the highest since 2018. Mortgage demand dropped sharply amid that increase. Overall mortgage application volume fell 6.8%. Refinance applications plunged 15% weekly and 60% year-over-year. Purchase application increased 1% weekly but tumbled 10% compared to a year ago. The higher rates are make affordability even harder for buyers with prices at record highs. BioNTech Pops on Q4 Earnings Beat BioNTech (BNTX) shares are jumping 7.6% ahead of the open after beating fiscal Q4 expectations. The German biotech company reported earnings of €12.18 per share on €5.53 billion in revenue. That topped analysts’ expectations on the top and bottom line. BioNTech announced a $1.5 billion stock buyback over the next two years and plans to propose a cash dividend of €2 a share. The company reiterated its guidance for 2022 revenue between €13 billion to €17 billion. The FDA approved a second booster shot of the Pfizer (PFE) BioNTech Covid vaccine for all Americans ages 50 and older on Tuesday. Lululemon Jumps on Strong Outlook lululemon athletica (LULU) shares are up 6.2% in premarket trade after crushing Q4 expectations and a strong full-year forecast. The athletic apparel giant reported adjusted Q4 earnings of $3.37 per share on revenue of $2.13 billion. Analysts were expecting EPS of $3.27 on $2.13 billion in revenue. Revenue jumped 23% year-over-year. lululemon forecast full-year fiscal 2022 earnings between $9.15 and $9.35 per share with revenue between $7.49 billion and $7.62 billion. That crushed Wall Street’s expectations for full-year EPS of $7.69 and $6.26 billion in revenue. The company also authorized a $1 billion stock repurchase program. Micron Tops Fiscal Q2 Expectations Micron Technology (MU) shares are up 2% ahead of the open after beating fiscal Q2 expectations. The chipmaker reported adjusted earnings of $2.14 per share on $7.8 billion in revenue. That topped the company’s forecast for adjusted EPS of $1.95 on $7.5 billion in revenue. The CEO said “We’re leading the industry in technology across DRAM and NAND, and our product portfolio momentum is accelerating.” Micron forecast fiscal Q3 revenue of $8.7 billion and non-GAAP profits of $2.46 per share. That was better than analysts’ expectations. Apple’s Hot Winning Streak Apple (AAPL) shares are slipping 0.6% in premarket trade as the tech giant looks to extend its winning streak. The iPhone maker’s stock rose for the 11th session in a row Tuesday, closing 1.9% higher. That’s Apple’s longest win streak since 2003, when the stock rose for 12 straight sessions. The company’s market cap is nearing $3 trillion again, after becoming the first publicly-traded company in history to hit that milestone on the first trading day of the year. AAPL shares are still down 1.7% from the record close on January 3. Ackman Ditches Activist Short Selling Billionaire hedge fund manager William Ackman announced his firm, Pershing Square Capital Management, will no longer participate in “activist short selling”. In his annual report to investors, Ackman said the firm has “permanently retired from this line of work”. He unveiled what he’s calling Pershing Square 3.0, which will be focused on executing change by working behind the scenes with companies rather than publicly shaming them. Ackman became known for his aggressive campaigns against JCPenney, payroll firm Automatic Data Processing (ADP), and Canadian Pacific Railway (CP). In Case You Missed It The pace of home price growth rose at the beginning of 2022. The S&P CoreLogic National Home Price index jumped 19.2% year-over-year in January. That was up from 18.9% in December. Home prices surged 32.6% annually in Phoenix, 30.8% in Tampa, and 28.1% in Miami. Consumer confidence rose for the first time this year in March. The Conference Board’s consumer confidence index rose to 107.2 this month from February’s revised reading of 105.7. Confidence in current economic conditions rose 10 points to 153, the highest since July 2021. Expectations for the next 6 months fell to 76.6 from 80.8. Consumers’ inflation expectations for the next 12 months hit a record high at 7.9%.
Continue Reading -->Coffee With Greta: Futures Pop Ahead of Economic Data
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +261 (+0.8%) SPX Futures: +35 (+0.8%) NASDAQ Futures: +145 (+1.0%) Good morning friends! Futures are higher as the market looks ahead to new economic data to be released today. Let’s get right to it! Market Awaits Economic Data of the Day Traders are gearing up for a bunch of new economic data today. Both the Case-Shiller national house price index and the Federal Housing Finance Agency house price index are set to be released in just a few moments. Those surveys measure the change in home prices on an annual basis and have both hit record highs over the past year. The Labor Department releases its February Job Openings and Labor Turnover Survey (JOLTS) at 10:00 a.m. ET. That survey is expected to show the jumper of job openings fell to 11.1 million last month from 11.3 million in January. Openings have outpaced the number of unemployed Americans looking for work as the U.S. economy struggles with a labor shortage. And the Conference Board’s March consumer confidence index will be released at 10:00 a.m. ET. Economists are expecting a three-point decline in that index to 107.5 this month. U.S. consumers have been squeezed by high prices as inflation pressures remain at a 40-year high. Treasury Yields Invert Two key Treasury yields are inverted again this morning after doing so for the first time since 2006 on Monday. The yield on the 5-year Treasury note is up nearly 3 basis points to 2.587% while the yield on the 30-year Treasury note is flat at 2.552%. This inversion is seen by many analysts as a warning sign of an impending recession. The more closely monitored spread between the 2-year and 10-year yields remains positive. The 2-year yield is sitting at 2.399% with the 10-year yield at 2.486%. Ukraine, Russia Resume Peace Talks Peace talks between Ukraine and Russia resumed in Istanbul today after two weeks of no talks. Ukrainian officials are still seeking a ceasefire agreement as Russia continues attacks on residential areas. Russia’s interfax news agency said those talks were “constructive”. Russia’s deputy defense minister also said the country would “radically reduce” its military activity outside Kyiv and Chernihiv. Three humanitarian corridors were opened in Ukraine today allowing civilians to escape the cities of Mariupol and Melitopol. Oil Prices Slide Oil prices are sliding as those peace talks resume. West Texas Intermediate crude futures are down 6.8%, dropping below $99 per barrel. Brent crude futures are down 6.7% to just over $105 per barrel. Demand concerns are also still looming over the oil market amid new Covid lockdowns in Shanghai. Shanghai accounts for 4% of China’s oil consumption and China is the largest crude importer in the world. LHC Group Rallies on UnitedHealth Buyout LHC Group (LHCG) shares are up 7.3% in premarket trade as UnitedHealth Group (UNH) announced it will buy the company for $5.4 billion. UnitedHealth plans to pay $170 cash for each LHCG share. The deal still needs to be approved by LHC Group’s shareholders and regulators. LHC Group provides in-home health and hospice care services and is based in Louisiana. FedEx Founder Steps Down as CEO FedEx (FDX) shares are up 3% ahead of the open after the company announced its founder will step down as CEO. FedEx founder Fred Smith will vacate the role June 1, becoming executive chairman. The company’s current president and chief operating officer, Raj Subramaniam, will take over as CEO. In a statement, Smith said, “As we look toward what’s next, I have a great sense of satisfaction that a leader of the caliber of Raj Subramaniam will take FedEx into a very successful future.” Subramaniam has been with FedEx since 1991. In Case You Missed It Tesla (TSLA) shares rallied 8% Monday after a new SEC filing showed the company wants to split its stock. The electric automaker will ask at the shareholders’ meeting “for an increase in the number of authorized shares of common stock… in order to enable a stock split of the Company’s common stock in the form of a stock dividend”. This would be Tesla’s second stock split in less than two years. President Biden unveiled a $5.8 trillion budget proposal for 2023 Monday. The proposal includes a 20% minimum tax rate on households worth more than $100 million. The plan also raises the corporate tax rate to 28% from 21%. Biden’s plan includes about $31 billion in new defense spending and more than $32 billion in funding to combat crime. Congress will use this proposal as a blueprint for budget negotiations.
Continue Reading -->Options In Play – SPY’s Big Week
It’s not a big week of earnings, and it is not an FOMC week, but it is an important week nonetheless for SPY. A critical technical setup is forming that could determine the next major move.
Continue Reading -->Options In Play – Earnings On The Radar Week Of 4/1/22
The end of March will see reports from several high-profile Retailers and a couple of Tech names, but earnings season is around the corner as April comes into view.
Continue Reading -->What Caused Sami to Change His Sentiment
The hot debate in the Strategic Day Trader room last Friday was whether or not the market has topped out long term or not. Sami was one of the first people to say that we have, but changed his bias after the market pop. What caused him to change his mind, and what is he thinking going into this week? In this video, Sami explains: – What he would do if he were bearish – Why he missed out on AVGO – Where BORR looks like it’s heading – Which time frame he likes best on EXTN – The penny stock that popped hard last week
Continue Reading -->Scott Redler’s Dog Bytes: Market Moves in Banks and ETFs
Last Friday, the SPX hit 4546. Moves like that are why we focus on price and patterns instead of opinions. SPX futures are flattish and we’ll see if we can hold above 4455-4500 to keep this active sequence intact to continue towards 4600.Small caps are trying to keep this active sequence intact. If IWM can hold $203.75, it stays constructive to clear $207.44 for a move up to the $212 area. ARRK gave a nice bounce off drastic oversold levels. It hit a high of $68+ where many sold. As long as this holds $62-$64, some will stay for a move towards the $78 area. The banks have been impressive and working higher. XLF needs to hold the $38ish level, though you still need the right entries and exits. XLE is still leading. It woke up Friday again after holding the 8 day. I’d keep buying dips if that continues. Now we can give it to the $76.50 area.Positions Disclosure as of 3/28/2022 at 8:30 a.m. ET
Continue Reading -->Coffee With Greta: Tesla Wants to Split
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -24 (-0.1%) SPX Futures: -2 (-0.1%) NASDAQ Futures: -4 (-0.03%) Good morning friends! Futures are flat as the market gears up for a big week of economic data. Let’s get right to it! Tesla Wants to Split the Stock Tesla (TSLA) shares are up 5.8% ahead of the open after a new SEC filing shows the electric automaker wants to split its stock. That filing said the automaker will ask at the annual shareholders meeting “for an increase in the number of authorized shares of common stock… in order to enable a stock split of the Company’s common stock in the form of a stock dividend”. Tesla split its stock 5-for-1 in August 2020 and shares have more than doubled since then. Recession Fears Spike as Treasury Yields Invert The 5-year and 30-year Treasury yields inverted today for the first time since 2006, spiking fears of a recession. The yield on the 5-year Treasury note rose to 2.6361% while the 30-year yield dipped to 2.6004%. But the spread between the 2-year and 10-year yields is still positive. The 10-year Treasury yield is down about 2 basis points to 2.46% after spiking above 2.5% at the end of last week. Traders Continue to Hike Fed Expectations As the Fed is laser-focused on inflation over the labor market, traders are hiking their expectations for the next meeting. CME Group’s FedWatch Tool shows 68.8% of traders believe the central bank will hike rates by 0.5% at the May 4 meeting. 63.2% also expect a 0.5% rate hike at the June meeting, while 13.2% now expect a 0.75% hike. Oil Falls as China Locks Down Shanghai Oil prices are down falling as new lockdowns in China prompt fears of weaker demand. West Texas Intermediate crude futures are down 4.9% to $108 per barrel with Brent crude futures falling 4.7% to $115 per barrel. The drop comes as Shanghai launched a two-stage lockdown of the city Monday amid a new Covid outbreak. China is the largest imported of crude in in the world. Experts say the oil market will likely turn bullish again later this week as OPEC is set to meet on Thursday. The group is not expected to approve a faster output increase despite the drop in Russian supply. Biden Budget Proposal President Biden is set to release his 2023 budget proposal today. The plan is expected to include a 20% “Billionaire Minimum Income Tax”. That tax would impose a 20% minimum tax rate on U.S. households worth more than $100 million. The White House says the plan would reduce the federal deficit by $360 billion over the next decade. Households that already pay at least 20% would not owe any additional taxes but those paying less would owe a “top-up payment” to meet the minimum. It’s unclear whether the tax plan would be able to pass in Congress. A fact sheet from the White House says Biden’s budget proposal would trim $1.3 trillion off the deficit over the next 10 years. The U.S. had a $2.8 trillion deficit in 2021. Big Week of Economic Data Wall Street is prepping for the release of key economic data for the Fed this week. The Labor Department releases its Job Openings and Labor Turnover Survey (JOLTS) on Tuesday. Then ADP’s private March payrolls report will be released Wednesday. The Bureau of Economic Analysis releases the Personal Consumption Expenditures Index Thursday morning. That includes the Fed’s preferred inflation measure, the Core PCE Price Index. And the official March jobs report will be released Friday morning. This week of data will give the market a better gauge of the economy and the Fed’s plans to tackle inflation at future meetings. Economists expect the jobs data to show the labor market is near full employment with inflation continuing to rise. In Case You Missed It Cannabis stocks rallied at the end of last week as the House gets ready to consider a legalization bill. Tilray (TLRY) shares ended the week 55% higher. The House Rules Committee is set to hold a hearing today on the Marijuana Opportunity Reinvestment and Expungement (MORE) Act. The bill is then expected to be voted on by the full House later this week.
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