Traders Shorting Tech's Heaviest Hitters like Amazon, ETFs to Watch

With market volatility returning to the capital markets in a big way following the latest tariff wars between the U.S. and China, traders are looking to the heaviest hitters in technology for short plays. As such, investors may want to play close attention to the exchange-traded funds (ETFs) that are heavy with Amazon exposure.

Per a CNBC report, “Hundreds of millions of dollars over the last two days flowed into new bets. Hedge funds are expecting stocks such as Amazon, Google-parent Alphabet and Netflix to be among the biggest losers. All three tech giants rank among the top 10 with the largest short position increases.”

Traders Shorting Tech's Heaviest Hitters like Amazon, ETFs to Watch 1

Amazon’s second-quarter earnings gave investors a mixed bag of things to like along with things to carefully consider before jumping into shares of the online retail giant. The company’s higher revenue was counterbalanced by an earnings miss, which puts exchange-traded funds (ETFs) with heavy weightings of Amazon on watch.

Amazon’s Q2 earnings results:

  • EPS: $5.22 vs. $5.57, according to analysts surveyed by Refinitiv
  • Revenue: $63.4 billion vs. $62.5 billion, according to Refinitiv
  • AWS: $8.38 billion vs. $8.5 billion, according to analysts surveyed by FactSet

One aspect of its future guidance that analysts cheered was its switch to one-day deliveries from two for its “Prime” members. It’s a move to achieve more profitability after revenue grew 16.9 percent compared to a year ago, which showed its slowest expansion since the first quarter of 2015.

A Trio of ETFs to Watch:

  1. Fidelity MSCI Consumer Discretionary Index ETF (FDIS): seeks to provide investment returns that correspond generally to the performance of the MSCI USA IMI Consumer Discretionary Index. The index represents the performance of the consumer discretionary sector in the U.S. equity market.
  2. Consumer Discret Sel Sect SPDR ETF (NYSEArca: XLY): seeks investment results that correspond to the price and yield performance of publicly traded equity securities of companies in the Consumer Discretionary Select Sector Index. The index includes securities of companies from the following industries: retail; hotels, restaurants and leisure; textiles, apparel and luxury goods; household durables; automobiles; auto components; distributors; leisure products; and diversified consumer services.
  3. ProShares Online Retail ETF (NYSEArca: ONLN): seeks investment results, before fees and expenses, that track the performance of the ProShares Online Retail Index. The index tracks retailers that principally sell online or through other non-store channels. The index uses a modified market-capitalization weighted approach, is rebalanced monthly and is reconstituted annually. Retailers may include U.S. and non-U.S. companies. To be eligible, retailers must: be classified as an online retailer, an e-commerce retailer, or an internet or direct marketing retailer, according to standard industry classification systems; have a market capitalization of at least $500 million; have a six-month daily average value traded of at least $1 million; and meet other requirements.

For more market trends, visit ETF Trends.