As has been widely documented, the technology sector saw itsfirst real weakness of the year at the end of November. The Nasdaq 100 Index fell off nearly 3 percent from its highs, thought it has since gained a good chunk of it back.
This rotation also manifested itself in fund flows, as the two ETFs with the most outflows during this time both track the Nasdaq 100. The very real rotation outside of technology stocks and funds is obviously creating some losers, but there are winners as well.
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Enter the Direxion Daily Technology Bear 3X Shares (NYSE:TECS). TECS is designed to deliver triple the daily inverse returns of the Technology Select Sector Index.
TECS tracks a cap-weighted index, meaning the ETF is an ideal way for aggressive traders to make short-term bets against the likes of Apple Inc. (NASDAQ:AAPL), Microsoft Corp. (NASDAQ:MSFT) and Facebook Inc. (NASDAQ:FB), among others. That trio combines for nearly a third of the Technology Select Sector Index.
Data indicate traders are embracing TECS. At the height of the rotation last week, volume in TECS was nearly 104 percent above the trailing 20-day average, according to Direxion data. Over the past month, TECS is averaging daily inflows of nearly $50,000.
That said, some traders are sticking by TECS' bullish counterpart, the Direxion Daily Technology Bull 3X Shares (NYSE:TECL). Although TECL has tumbled, its average daily inflows over the past month are north of $1.8 million, according to issuer data.
In a case of living and dying by the sword, semiconductor stocks were a primary reason the technology sector surged for most of 2017. That industry was also a big reason why the technology sector is currently slumping.
Month-to-date, the Direxion Daily Semiconductor Bull 3X Shares (NYSE:SOXL), which tries to deliver triple the daily returns of the PHLX Semiconductor Sector Index, is one of Direxion's worst-performing leveraged bull funds.
SOXL's bearish cousin, the Direxion Daily Semiconductor Bear 3X Shares (NYSEARCA:SOXS) is proving popular with traders. That inverse leveraged ETF is averaging daily inflows of more than $200,000 over the past month.
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