A Potent ETF Combo for Two Barometers of Economic Health

The retail and transportation sectors can be bellwethers of economic health. Right now, both sectors are performing well, which makes for a potent two-punch ETF combination in the Direxion Daily Retail Bull 3X ETF (RETL) and the Direxion Daily Transportation Bull 3X Shares (TPOR).

When the economy is thriving, retail consumers are more apt to open their wallets. Likewise, the transportation sector is literally on the move, carrying purchased goods from retailer to consumer.

Using the S&P 500 indexes in both respective sectors, it’s clear to see both have been trending higher the past year. Transportation is up almost 70%, while retail is up 54%.

^SPXTG Chart

“Both help us understand investor expectations of the economy reopening and therefore help us understand if we are in a risk on/off environment,” a See It Market article noted.

RETL seeks daily investment results of 300% of the daily performance of the S&P Retail Select Industry Index. The exchange traded fund invests in securities found within the index, which is a modified equal-weighted index that measures the performance of the stocks comprising the S&P Total Market Index.

TPOR, which is up almost 30% year-to-date, seeks daily investment results that are equal to 300 percent of the daily performance of the Dow Jones Transportation Average. The index measures the performance of large, well-known companies within the transportation industry.

Both TPOR and RETL give 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; and
  • Stay agile, with liquidity to trade through rapidly changing markets

Momentum Strong for Both Sectors

Looking at RETL and TPOR, both funds are up significantly year-to-date, highlighting the momentum in both sectors. RETL is up 150% while TPOR is also performing well at a 44% YTD gain.

RETL Chart

RETL’s relative strength index (RSI) is registering a 69.29 reading, which is a smidge below overbought levels. Overall, it’s safe to say momentum is on the side of RETL, with its 50-day moving average practically double the 200-day moving average.

RETL Chart

In the case of TPOR and its one-year chart, its 72.20 reading on the RSI puts it firmly in overbought levels. Its 50-day moving average is about 37% higher than the 200-day moving average.

TPOR Chart

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