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Top Inverse/Leveraged ETFs of Last Week

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Last week was downbeat for Wall Street. SPDR S&P 500 ETF Trust (SPY),SPDR Dow Jones Industrial Average ETF Trust (DIA),the Nasdaq-100-based ETF Invesco QQQ Trust (QQQ), iShares Russell 2000 ETF (IWM) and iShares MSCI ACWI ETF (ACWI) lost about 3.7%, 3.2%, 4.2%, 2.6%, and 3.6%, respectively, past week (read: Buy the Dip in These ETFs).

Simple profit-booking and some warnings from the too-big-to-fail companies probably led to this crash. For example, Tesla’s stock fell more than 2% after the company’s profits underperformed the estimates, though revenues notched a quarterly record.

Apple’s stock dipped 0.8% after CEO Tim Cook said during the company’s earnings call that he had expected a second-quarter deceleration in wearables and services sales growth. Facebook too cautioned about the challenges in the ad environment in 2021.

Increased speculative trading activities involving bidding up for heavily shorted stocks like AMC Entertainment (AMC) and GameStop (GME) also led to the crash.Users of Reddit group, in which about five million members exchange investment ideas, fetched significant profits by swallowing shares of GameStop Corp. that had been shorted by big hedge funds(read: ETF Strategies to Combat Market Volatility & Soaring COVID-19 Cases).

Against this backdrop, below we highlight a few winning leveraged ETFs of last week.

Retail Bull 3X Direxion (RETL - Free Report) ) – Up 45.2%

The underlying S&P Retail Select Industry Index is a modified equal-weighted index that is designed to measure performance of the stocks comprising the S&P Total Market Index that are classified as retail sub-industry.

Notably, GameStop’s shares jumped 235.7% last week. Now, GameStop takes the fourth spot in the retail index with about 1.52% allocation to its assets and hence explains the rally in RETL (read: How to Trade GameStop Trading Frenzy With ETFs).           

Microsectors -3X U.S. Big Oil Index ETN (NRGD - Free Report) – Up 22.4%

The MicroSectors U.S. Big Oil Index -3X Inverse Leveraged ETNs provide inverse leveraged exposure to the Solactive MicroSectors U.S. Big Oil Index. The index is equal-dollar weighted and provides exposure to the 10 largest U.S. energy and oil companies. Oil prices slumped about 1.2% last week. No wonder, this left an adverse impact on the oil stocks as well. This is why this inverse leveraged energy ETF gained last week.

Microsectors -3X U.S. Big Banks ETN (BNKD - Free Report) – Up 22.3%

Banking stocks too underperformed last week. Four big banks reported mixed results while two crushed estimates in the latest reporting season. Moreover, the recent decline in long-term U.S. treasury yields resulted in the flattening of the yield curve and hurt the banking funds. Hence, this inverse leveraged banking product gained last week.

S&P 500 High Beta Bear 3X Direxion (HIBS - Free Report) – Up 20.3%

The underlying S&P 500 High Beta Index selects 100 securities to include in the Index from the S&P 500 Index that had the highest sensitivity to beta over the past 12 months. Since Wall Street has been in great shape lately, leveraged high-beta ETF gained last week.      

Semiconductor Bear 3X Direxion (SOXS - Free Report) – Up 18.2%

The Direxion Daily Semiconductor Bear 3x Shares seeks daily investment results, before fees and expenses, of 300% of the inverse of the performance of the PHLX Semiconductor Sector Index. Semiconductor scarcity is delaying the production of variety of products, including personal computers, consumer electronics and automobiles. This piece of news probably weighed on the semiconductor stocks and boosted the bear fund.            

Ultrapro Short Midcap 400 Proshares (SMDD - Free Report) – Up 15.5%

The ProShares UltraPro Short MidCap400 seeks daily investment results, before fees and expenses, which correspond to triple (300%) the inverse (opposite) of the daily performance of the S&P MidCap 400 Index. Global market crash last week also weighed on mid-capitalization, offering decent gains to the inverse mid-cap fund.

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