Go Back-To-School Shopping With This ETF

It feels like summer just started, but much to the chagrin of kids across the U.S., parents and retailers are already preparing for back-to-school shopping. Not surprisingly, back-to-school shopping season is big business for retailers.

“Nearly half (47%) of parents say they expect to spend between $101 and $300 per child on back-to-school shopping,” according to the Coinstar Back-to-School Survey. “Nine in 10 parents say they will incur added expenses during the school year to cover extracurricular activities such as field trips, science fair projects and book fairs. These tacked-on expenses add up with two-thirds of parents expecting to spend an additional $51 to $300 this year.”

What Happened

A brisk back-to-school shopping season could lift the already resurgent Direxion Daily Retail Bull 3X Shares RETL, the most popular leveraged exchange traded fund dedicated to the retail sector.

RETL attempts to deliver triple the daily returns of the S&P Retail Select Industry Index. That equal-weight index devotes over 59 percent of its weight to specialty retailers and a combined 28.3 percent of its weight to Internet and food and staples retailers.

Why It's Important

Important to back-to-school sales this year is “growth this year is the increase in disposable income due to the jump of 3.7 million full-time jobs since January 2017, which provides the steady cash flow households need,” reports Chain Store Age.

Important to RETL's near-term fortunes is broad-based strength across the retail space, including from some once struggling industries.

“This is the most momentum we’ve seen in seven years, and spans almost all retail sectors — even long-lagging apparel, where growth has tripled to 4.8% from its annual growth of barely 1.5% since 2011,” said Craig Johnson, president, Customer Growth Partners, in an interview with Chain Store Age.

What's Next

The back-to-school shopping season lasts for close to two months, which is far too long to hold leveraged ETFs, but traders anxious to put RETL to the test can use the fund as an earnings play. Several of the top 10 components in RETL's underlying index deliver earnings reports later this month and into early August.

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