Latest Tech Sell-Off Opens Opportunities for Single-Stock ETFs

The Nasdaq 100 is down about 9% for the past month, further propagating the tech rout that the stock market has been seeing the whole year. The index is down over 30% for the year, making way for traders to take advantage of singe-stock exchange traded funds (ETFs) that focus on the bearish side of the trade.

It’s a common notion that trying to time the stock market is a difficult endeavor, if not an impossible one. That’s especially the case when trying to pick a bottom in the latest tech rout.

“One cruel truth the stock market confirmed this past week is that trying to pick the bottom for technology stocks is a fool’s errand,” wrote Eric Savitz in Barron’s. “The Nasdaq Composite’s terrible September—it was down 10.5% on the month—has made the bottom-fishing that took place over the summer look ill-advised. As I’ve noted before, the first downturn in tech earlier this year was all about valuations. This new phase of the decline is all about softening earnings. When it comes to price-to-earnings ratios, the market is running into a denominator problem.”

In the meantime, bearish traders can look at the heavy hitters in the Nasdaq 100 such as Amazon, Google, Microsoft, and Apple. Here are four single stock ETF options for the bearish side of tech:

  1. Direxion Daily AMZN Bear 1X Shares (AMZD)
  2. Direxion Daily GOOGL Bear 1X Shares (GGLS)
  3. Direxion Daily MSFT Bear 1X Shares (MSFD)
  4. Direxion Daily AAPL Bear 1X Shares (AAPD)

AAPL Chart

Head Back to the Upside

It’s not all doom and gloom that’s benefiting the bears, especially if the U.S. Federal Reserve can get inflation under control. That would be akin to walking a tightrope given that the Fed would have to tighten monetary policy without hurting economic growth.

“Inflation is soaring, interest rates are rising, and the stock market is in decline,” a Motley Fool article explained. “It’s entirely normal for an investor to feel challenged in this environment. The most positive thing to do in such a situation is to focus on the long term because history proves that, given enough time, the broader markets tend to recover to new highs. With that said, it can be helpful to identify companies that have significant future growth potential but can also weather difficult economic periods.”

Traders who sense that upside could be ahead for big tech can take the opposite side of the aforementioned ETFs with a dose of added leverage:

  1. Direxion Daily AMZN Bull 1.5X Shares (AMZU)
  2. Direxion Daily GOOGL Bull 1.5X Shares (GGLL)
  3. Direxion Daily MSFT Bull 1.5X Shares (MSFU)
  4. Direxion Daily AAPL Bull 1.5X (AAPU)

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