Consumer Confidence Concerns Put Direxion's Amazon-Focused Bull And Bear ETFs In The Spotlight

Recently, Benzinga Insights conducted an overview of analysts' assessment of e-commerce and technology juggernaut Amazon.com AMZN. From a top-down perspective, the overwhelming majority of Wall Street experts are at least somewhat bullish on AMZN stock, with the worst rating being one of indifference. However, the number of indifferent analysts has increased, possibly indicating some skepticism.

To be sure, AMZN stock has demonstrated resilience. While it's no longer the growth machine it once was, it still prints respectable performance metrics. In the past one-year period, AMZN gained nearly 22% of value. Over the trailing five years, the equity moved up almost 126%. Dominance in its core e-commerce marketplace business, along with a massive and still-burgeoning footprint in cloud computing has helped Amazon stay competitive.

Nevertheless, economic storm clouds may pose risks to AMZN stock. Last week, Gallup's Economic Confidence Index (ECI) held steady at a reading of -19, the same negative score as January. Fundamentally, concerns tied to President Donald Trump's tariffs on imports from Mexico and Canada — along with other key economic partners — have weighed heavily on consumer sentiment. In addition, anxieties abound that the punitive actions could exacerbate inflationary pressures.

Adding to the urgency of the matter, the Conference Board Consumer Confidence Index fell sharply in February, giving up 7 points to 98.3. This reading marks the steepest drop since August 2021. It's also the third consecutive monthly decline, pushing the index to the lower end of its two-year range. Notably, in the trailing month, AMZN stock slipped almost 10%.

The Direxion ETFs: Although the back-and-forth narrative presents a complex backdrop for investors, short-term traders may speculate on the variability of AMZN stock with Direxion's Amazon-focused exchange-traded funds.

For the bulls, traders have access to Direxion Daily AMZN Bull 2X Shares AMZU, which seeks daily investment results of 200% of the performance of Amazon's common stock. On the other end, the bears can acquire Direxion Daily AMZN Bear 1X Shares AMZD, a fund that tracks 100% of the inverse performance of the target security.

Primarily, both the AMZU and AMZD ETFs offer convenience. Rather than trade options – which can involve complex transactions – retail investors can simply pick up units of these funds, much like a publicly traded security.

However, Direxion notes that putting money in these funds involves a high degree of risk. In particular, leveraged and inverse ETFs are designed for exposure lasting no longer than one day. Extending beyond this recommended holding period may lead to a de-coupling from expected performance trends due to the daily compounding of volatility.

The AMZU ETF: Thanks to the steady performance of AMZN stock, the AMZU ETF has likewise been positive, gaining nearly 17% in the past one-year period.

• Investors still need to apply a vigilant approach as Direxion's AMZN bull fund has been volatile recently, losing more than 19% in the trailing month.
• AMZU bounced off its 200-day moving average recently, which is an encouraging sign. Nevertheless, it needs to rise back to its 50 DMA to avoid further technical damage.

The AMZD ETF: Overall, circumstances have not been kind to Direxon's AMZN bear fund, with the inverse ETF losing more than 21% in the past 52 weeks.

• Despite the ugliness, the AMZD ETF punched past its 50 DMA around the middle of February and has continued to build momentum.
• Volume has been steadily rising as AMZD inches higher, suggesting brewing bearish sentiment. Moving forward, the next major target is the 200 DMA, standing near the $13 level.

Featured photo by Alexa on Pixabay.