Looking To Trade The Retail Sector Bullishly Following Target Earnings? This Fund Offers 3X Leverage

The Direxion Daily Retail Bull 3X Shares ETF RETL was popping over 3% higher on Tuesday, in tandem with Target Corporation TGT. Target was reacting positively to its earnings print.

For the fourth-quarter, Target reported earnings of $1.89 per share on revenues of $31.395 billion, which beat the estimate of $1.40 EPS on revenues of $30.72 billion.

RETL is a triple leveraged fund that is designed to outperform the S&P Retail Select Industry Index by 300%. The index includes a variety of companies from apparel, automotive retail, to specialty stores, food retail and department stores.

Some of the more familiar names in the ETF include Amazon.com, Inc AMZN, weighted at 0.86%, Dollar Tree, Inc DLTR, weighted at 0.83% and Target Corporation TGT, which is weighted at 0.90% in the ETF.

It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to a long-term investment.

Traders looking to play the retail sector to the upside via RETL will want to watch for signs the ETF is going to buck its current trend and reverse higher.

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The RETL Chart: RETL is trading in a downtrend, making a consistent series of lower highs and lower lows. RETL’s most recent lower high was formed on Monday at $9.04 and the most recent lower low was printed at the $8.47 mark on Friday.

On Friday, RETL lost support at the 50-day and 200-day simple moving averages (SMAs) but the bears weren’t able to take control to drop the ETF down significantly under the SMAs. Bullish traders may choose to wait to see RETL cross back above the 50-day and 200-day before taking a position.

On Tuesday, RETL was trading with an inside bar pattern, with all the price action taking place within Monday’s trading range. The pattern is neutral in this case, and traders and investors can watch for RETL to break up or down from Monday’s mother bar on higher-than-average volume to gauge future direction.

RETL has resistance above at $9.38 and $9.78 and support below at $8.79 and $8.22.

Read Next: SPY Gaps Higher Ahead Of Retail Earnings But Looks Bearish Longer-Term

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