Is a Cloud Computing Comeback in the Making? | ETF Trends

Like the rest of the technology sector thus far in 2022, cloud computing has fallen to the wayside despite being a much-celebrated sub-sector amid the pandemic. With social distancing measures easing and global inflation rising, cloud computing has gone unloved, but are things changing?

“With five months in the books, 2022 has been a dark year for tech so far,” CNBC reported. “Nobody knows that more than investors in cloud computing companies, which were among the darlings of the past five years, particularly during the stay-home days of the pandemic.”

That hurt has been evident in the ISE CTA Cloud Computing Index, which is down 32% for the year. This is happening despite strong fundamentals, according to CNBC.

“Paradoxically, growth remains robust and businesses are benefiting as economies re-open, but investors are selling anyway,” CNBC added.

^ISECTACC Chart

^ISECTACC data by YCharts

However, the past five days has painted a more positive picture with the index up around 4%. It could be an early sign that the sector has gone oversold an impending bounce could happen at some point.

^ISECTACC Chart

^ISECTACC data by YCharts

2 Options to Play Cloud Computing

If traders forecast more weakness ahead, they can use the Direxion Daily Cloud Computing Bear 2X Shares (CLDS), which seeks 200% of the inverse (or opposite) of the daily performance of the Indxx USA Cloud Computing Index. The fund invests in swap agreements, futures contracts, short positions, or other financial instruments that, in combination, provide inverse (opposite) or short leveraged exposure to the index equal to at least 80% of the fund’s net assets (plus borrowing for investment purposes).

Like all leveraged ETFs, these Direxion products are intended only for investors with an in-depth understanding of the risks associated with seeking leveraged investment results, and who plan to actively monitor and manage their positions. There is no guarantee that these funds will meet their objectives.

Taking the opposite direction on the trade, the Daily Cloud Computing Bull and Bear 2X Shares ETFs (CLDL) is ideal for traders who think the weakness could be over. Whether that’s in the short or long term is anyone’s guess, but Direxion offers ETFs to play both sides when volatility strikes.

CLDS Chart

CLDS data by YCharts

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