Another Trump Bump For This Leveraged ETF

Some areas of the Trump trade may be taking a break, but that may not be the case for aerospace and defense stocks and the related exchange traded funds (ETFs). On the back of proposed increases in defense spending, the Direxion Daily Aerospace & Defense Bull 3X Shares (NYSE:DFEN) could once again merit attention by aggressive traders.

The Trump Administration “is requesting $716 billion for the Defense Department, a 13-percent increase over 2017 levels. The fiscal 2018 budget, which still has not passed Congress, would contain $80 billion more funding for the military, for a total increase of $165 billion in Pentagon spending over two years,” reports The Washington Times. 

DFEN, which debuted in May 2017, is the only dedicated leveraged aerospace and defense ETF on the market. The ETF aims to deliver triple the daily returns of the Dow Jones U.S. Select Aerospace & Defense Index.

Home To Some Stars

Given the recent struggles of U.S. equities, it is not surprising that entering Monday, just nine members of the Dow Jones Industrial Average were sporting positive year-to-date returns. To this point in 2018, Boeing Co. BA, which accounts for more than 10 percent of DFEN's underlying index, is the only Dow component up at least 5 percent this year.

“President Donald Trump’s $686 billion defense request for the coming fiscal year would propel the Navy toward a new goal of 355 ships, restore major funding for a Boeing Co. fighter jet favored by the president and boost missile defense spending to counter threats from North Korea and Iran,” reports Bloomberg. 

DFEN showed its ability to respond to defense spending headlines on Monday. The leveraged defense ETF surged more than 5 percent on volume that was roughly 70 percent above the daily average.

Traders Are Responding

Speaking of increases in volume, for the five-day period ended Feb. 9^th, volume in DFEN was 44 percent above the trailing 20-day average, according to issuer data.

More importantly, traders are pouring into the fund. Over the past month, DFEN's average daily inflows are north of $1.16 million, according to Direxion data. 

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