The TZA activity of late is even more interesting to dissect given the huge inflows in “long” Small Cap ETF products in the past two months.
We have noted on several occasions in our daily recaps to trading clients that related ETFs, IWM (iShares Russell 2000) as well as UWM (ProShares Ultra Russell 2000) have experienced huge inflows right at the beginning of September and as equities have softened in the past few sessions, those whom have doubted the sustainability of a “Small Cap” or “High Beta” rally, seem to be pouncing on the opportunity to get short the segment of the market.
We do note that the Russell 2000 Index is still trailing Large Caps year to date, up 12.11% versus the S&P 500 Index rising 12.64%. In the trailing one year period, The Russell is up 20.83% versus the SPX’s gain of 18.32%, and in the five year trailing period, Small Caps have actually “out-paced” Large Caps, only down 1.79% versus Large Caps with SPX as the proxy down 7.90% during this same time frame.
This data, and recent fund and options flows in the marketplace, clearly illustrates the “push and pull” that has been occurring within the U.S. Small Cap Equity space for some time now.
Direxion Daily Small Cap Bear 3X
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