Time To Go Shopping With This Retail ETF

With the holiday shopping season here, traders may be tempted to consider consumer discretionary and retail exchange traded funds (ETFs).

While holiday shopping is a valid reason to examine retail investments, there are other reasons for active traders to give the Direxion Daily Retail Bull 3X Shares RETL a look.

What Happened

RETL tries to deliver triple the daily returns of the S&P Retail Select Industry Index (SPSIRETR), an equal-weight collection of a variety of retailers. While RETL tumbled more than 6 percent on Friday, the leveraged retail ETF is still up more than 10 percent this month, making it one of Direxion's better-performing leveraged bullish funds to start November.

For the five days ending Thursday, Nov. 8, RETL's volume was nearly 46 percent above the trailing 20-day average, according to issuer data. That could be a sign traders are already revisiting the leveraged retail ETF.

Why It's Important

Other fundamental factors speak to RETL's near-term potential, including wage growth. However, wage growth can cut both ways for restaurants and retailers.

“Retailers and restaurants tend to have large employee bases and are expected to be among companies most likely to feel the biggest impacts of higher wages,” reports Reuters. “Morgan Stanley strategists wrote in a note this week that hotels, restaurants, retailers, energy equipment and services, and IT services may be among industries most exposed to rising wages.”

RETL's underlying index allocates about 44 percent of its combined weight to apparel retailers, specialty retailers and food retailers.

What's Next

Believe it or not, what is next for RETL are a slew of earnings reports. While third-quarter earnings seasons is mostly in the books for other sectors, that is not the case with retail.

For the two weeks starting Monday, Nov. 12, nearly 31 percent of the components index report earnings, providing tactical traders with ample near-term opportunity with the triple leveraged retail ETF over the coming trading days.

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