Dusting Off DUST For A Quick Trade

Gold bugs will not want to hear this, but with the yellow metal lower by nearly 2 percent in June, some risk-tolerant, short-term traders could be eyeing bearish bets on often volatile gold miners stocks.

While that could mean bad news for miners and traditional exchange traded funds dedicated to mining stocks, it could prove to be gold news for the Direxion Daily Gold Miners Bear 3X Shares DUST, one of the most popular inverse leveraged ETFs of any variety.

DUST attempts to deliver triple the daily inverse returns of the NYSE Arca Gold Miners Index, one of the most widely followed gauges of gold miners equities. That index “is a modified market capitalization weighted index comprised of publicly traded companies that operate globally in both developed and emerging markets, and are involved primarily in mining for gold and, to a lesser extent, in mining for silver. The Index will limit the weight of companies whose revenues are more significantly exposed to silver mining to less than 20% of the Index at each rebalance date,” according to Direxion. 

Recent price action confirms DUST is gaining momentum. The ETF is up 16.5 percent over the past week. However, a gain like that can easily be delivered by DUST in a single trading day meaning the ETF can also fall by that much in just one day. Either way, traders are reminded that leveraged ETFs, in particular DUST, are intraday instruments and should not be held for days and weeks on end.

Over the past 30 days, DUST has risen 55 percent of the time with an average daily gain of 3.7 percent, according to issuer data. 

Additionally, DUST's technicals are currently appealing.

“From a technical perspective, DUST is currently in a short-term uptrend,” according to Direxion. “The current price action is reverting higher from the “short-term” support level. DUST percentage of positive days in the last 30-days is well above 50 percent. The 7-day moving average has crossed the 20-day moving average, supporting a possible uptrend continuation.”

DUST's bullish counterpart is the Direxion Daily Gold Miners Bull 3X Shares NUGT, also one of the most popular and heavily traded leveraged ETFs.