A Retail Sales Trade as Holiday Shopping Season Intensifies | ETF Trends

With Black Friday and Cyber Monday fast approaching, the retail sales play is in full swing as traders tee up their positions for the forthcoming holiday shopping season.

Additionally, another catalyst is the October Retail Sales data that’s scheduled to be released on November 16.

“On November 16th at 8:30am the October Retail Sales data report will be released,” a Direxion Investments Xchange newsletter says. “The report provides an aggregated measure of sales of retail goods and services over a period of a month.”

“In September, the data showed an unexpected increase of 0.7% month-over-month following an upwardly revised 0.9% surge in August and beat market forecasts of a 0.2% decline,” the newsletter says further. “This was seen as a solid sign of consumer strength in the face of post-COVID-reopening supply chain crisis.”

Retail equities started the year strong and then returned back down to earth, but they could finish the year on a high note.

“Retail–specific stocks offer an entirely different setup,” the newsletter adds. “Thanks to GameStop, the group ripped to start the year, but have stalled out over the past six months making them potentially ripe for opportunity. They have traded in a channel and may be ripe for a move either up or down.”

Leveraging the Retail Trade 3x

Traders can load up on three times the leverage in the retail sector using the Direxion Daily Retail Bull 3X ETF (RETL). RETL seeks daily investment results of 300% of the daily performance of the S&P Retail Select Industry Index.

With its triple leverage, RETL gives investors the ability to:

  • Magnify short-term perspective with daily 3X leverage.
  • Go where there’s opportunity, with bull and bear funds for both sides of the trade.
  • Stay agile, with liquidity to trade through rapidly changing markets.

With 3x leverage, traders should be aware of the risks. While maximum gains could be extracted, the same could be said when it comes to the downside if the retail sector shows a less-than-stellar showing this holiday season.

“While the economies of the United States and many other countries continue to look to be on the path to recovery, it may be only a matter of time until people around the world begin to spend more and end up contributing to a global resurgence in the discretionary economy,” the Xchange newsletter says. “The real trick to the trade is in the timing. COVID variants, supply chain conundrums, and inflation worries may cause more ups and downs in the short run.”

RETL ChartFor more news, information, and strategy, visit the Leveraged & Inverse Channel.