We have talked about the trade-able volatility that is present in these markets in the past several weeks, where technical traders and short term directional traders, some of whom are using leverage are thriving.
A quick look at the intraday chart in TNA (Direxion Daily Small Cap Bull 3X Shares, Expense Ratio 0.95%) from yesterday, which is designed to provide three times the daily leveraged exposure to the Russell 2000 Index shows a $6 handle intraday range (approximately a 9% intraday range).
The ETF is certainly not broken, as the Russell 2000 Index itself, and linked ETFs such as the mammoth IWM (iShares Russell 2000, Expense Ratio 0.28%) briefly sold-off sharply on Tuesday, reaching its lowest levels since
February only to rebound strongly and firmly in the green to end the session.
We have seen good sized inflows in TNA (>$200 million), expressing to us the nature of this market lately, for those who dare to trade it from either side, long or short.
This market has a “Quick And The Dead” feel to it, as technical signals and levels have been rather reliable in most major indexes, and coupled with the fact that we are in core earnings season and there are renewed tensions out of the Ukraine situation hitting daily news headlines, portfolio managers seem to have a ton of opportunity to aggressively trade from both sides of the market, but only if they are prepared to exit positions inside of two to twenty four hours.