Short-term traders know that when it comes to leveraged equity exchange-traded fund (ETF) trading, liquidity is key in order to enter and exit positions quickly. As such, they can look to the ETFs with the highest volumes in order to look for opportunities.

The current list is composed of funds to appease bulls looking for leverage and bears as data company FactSet has been warning investors about an earnings recession in the S&P 500. This recession risk could put defensive sectors in concentrated focus as opposed to the more cyclical sectors, which provides an opportunity for relative weight exchange-traded funds (ETFs).

FactSet estimated that an earnings drop of 1.9 percent would result in the second quarter of 2019. In turn, that would come after a 0.5 percent drop in the first quarter, which would mean that an official earnings session would be underway if their forecasts are correct.

It’s the primary driver for investors looking for a rate cut to help prop up the market, especially after a U.S.-China trade deal that was supposed to happen eventually fell through.

“The overall market number for EPS (earnings per share) masks a very uneven picture underneath that a number of sectors are either in an earnings recession or something close to it,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “That raises questions of the strength of the economy, whether we should be concerned about a recession if this doesn’t turn around in some way. That’s why the Fed is looking at potentially cutting rates and why people are looking for a rate cut.”

This is why McMillan looks at operating earnings as opposed to earnings per share. To McMillan, it depicts a more accurate picture on the health of the economy, and furthermore, operating earnings are actually higher quarter-to-quarter and year-over-year.

This holds true for specific sectors in particular—namely financials, healthcare and utilities. As far as trading leveraged ETFs go, broad market S&P 500 funds have been a weapon of choice for short-term traders.

Here are the 10 most active equity ETFs so far in 2019:

SymbolETF NameAvg Volume
TQQQProShares UltraPro QQQ16,702,551
SQQQProShares UltraPro Short QQQ11,385,806
NUGTDirexion Daily Gold Miners Bull 3X Shares9,915,466
GUSHDirexion Daily S&P Oil & Gas Exploration & Production Bull 3x Shares9,360,255
SPXSDirexion Daily S&P 500 Bear 3X Shares6,832,369
DUSTDirexion Daily Gold Miners Bear 3X Shares6,528,056
SDSProShares UltraShort S&P 5005,299,606
SPXUProShares UltraPro Short S&P 5005,055,330
UPROProShares UltraPro S&P 5004,363,158
SPXLDirexion Daily S&P 500 Bull 3X Shares4,108,386

 

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