Bears hibernate during the winter months, but on the back of extended declines for oil and Russian equities, the Direxion Daily Russia Bear 3x Shares (NYSEArca: RUSS) is far from sleepy.
Brent oil, the contract Russia prices crude in, for February delivery is off 5.4% to $53.37 at this writing while the United States Brent Oil Fund (NYSEArca: BNO) is lower by 5.2% on volume that is already nearly double the daily average.
BNO has plunged 43.6% over the past 90 days. Confirming its correlation (and vulnerability) to oil prices, the Market Vectors Russia ETF (NYSEArca: RSX), the largest and most heavily traded Russia ETF, has shed 35.5% over that period. [Russia ETFs See Surprising Inflows]
RUSS is the triple-leveraged equivalent of RSX as the former seeks to deliver three times the daily inverse performance of the Market Vectors Russia TR Index, RSX’s underlying index. With the path of least resistance for oil and Russian stocks being to the downside, RUSS becomes an increasingly alluring idea for the risk-tolerant trader
“On the RSX daily chart, you can see a bearish pennant formed. The RSX is under $15, which means a breakdown is now on the table. Any further weakness likely sees an actionable short trigger from here,” according to Chessnwine of Market Chess.
Some traders are already warming to the idea of RUSS delivering more near-term upside. Over the past week, only two other Direxion leveraged ETFs have seen greater increases in volume relative to the 20-day average than RUSS and over the past month, RUSS has seen creation activity while over $20.2 million has been yanked from the Direxion Daily Russia Bull 3x Shares (NYSE: RUSL), according to Direxion data.
Of course, there are risks to long RUSS thesis. A snapback rally in BNO would likely mean the same for RSX, which would pressure RUSS. Not surprisingly, RUSS is also a highly volatile ETF. In fact, it has been the most volatile bearish ETF in Direxion’s stable over the past month. Among all leveraged Direxion ETFs, only RUSL has been more volatile over that period, according to issuer data.
“The risk, of course, is that oversold United States Oil Fund (NYSEArca: USO) and the Energy Select Sector SPDR (NYSEArca: XLE) will bounce. But, for now, it looks like too many trapped longs are still shell-shocked and have yet to fully capitulate,” according to Market Chess. [Leveraged Russia ETFs Gain Cash]
Direxion Daily Russia Bear 3x Shares
