At the beginning of the pandemic, the sun was shining on cloud computing as social distancing measures stressed a focus on online business models. Now, bearish sentiment is pushing the space lower, making way for gains in inverse exchange traded funds (ETFs) focused on cloud computing.
An overall draw-down in technology this year has taken down cloud computing as well.
“Wider economic pessimism may finally be impacting the cloud computing market after revenue growth at all the major cloud providers slowed down in Q2 2022,” a Tech Radar report said.
“Amazon Web Services (AWS) posted sales of $19.7 billion for its second quarter, up 33% year-over-year, but with a 37% growth rate that was lower than the previous quarter,” the report added. “Google Cloud brought in $6.3 billion of revenue in Q2 2022, a 35% year-on-year increase compared to Q2 2021’s $4.6 billion revenue, but much lower than the 44% jump from Q1 2021’s $4 billion to Q1 2022’s $5.8 billion.”
Bearish ETF Up Almost 70%
Traders could be eyeing the cloud computing sector for bearish opportunities. As opposed to taking short options on specific cloud computing companies using various positions, there’s an easier way for traders who also want the added dose of leverage in their positions.
As such, one fund to consider is the Direxion Daily Cloud Computing Bear 2X Shares (CLDS), which is up almost 70% so far this year. CLDS seeks 200% of the inverse (or opposite) of the daily performance of the Indxx USA Cloud Computing Index, and 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.
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