Recent jobs data has been discouraging. Inflation remains too high for many consumers’ taste. Plenty of would-be shoppers are dialing back discretionary spending because prices are too high on consumer staples. Put it altogether and it could be a perfect storm for disappointing back-to-school shopping data to materialize.
Traders looking to make bearish wagers on back-to-school shopping trends may want to evaluate the Direxion Daily AMZN Bear 1X Shares (AMZD). As its name implies, AMZD is a single-stock ETF that attempts to deliver the daily inverse returns of Amazon (AMZN). So if shares of Amazon decline by 1% on a given day, AMZD should rise by that amount.
Experienced traders and investors know Amazon is a story stock and one that’s often hard to bet against. A more than eightfold gain over the past decade proves as much, and the company’s business model isn’t solely dependent on discretionary spending. But that doesn’t diminish the possibility that nimble traders can potentially harvest short-term gains with AMZD.
Assessing AMZD Advantages
In an ideal economic environment, AMZD’s bullish counterpart — the Direxion Daily AMZN Bull 2X Shares (AMZU) — would be the way to tap into Amazon shares in amplified fashion. Yett that’s not the hand being dealt to investors today. In fact, AMZD looks a prudent near-term idea.
“Let’s start with the mood on Main Street. According to our latest proprietary consumer survey, confidence in the economy is sliding,” noted Michelle Weaver of Morgan Stanley. “Just under one-third of consumers think the economy will improve over the next six months—which is down from 37 percent last month and 44 percent in January. And that’s a pretty big drop from the start of the year.”
As Weaver noted, inflation remains top-of-mind for consumers. Alone, that could be reason for traders to assess AMZD. But the aforementioned gloomy sentiment displayed by many consumers bolsters the case for AMZD, and it is indeed dour.
“Meanwhile, half of all consumers expect the economy to get worse,” added Weaver. “Household finances are also feeling the squeeze. While around 40 percent expect their financial situation to improve, closer to 30 percent expect it to worsen. The net score is still positive, but down from last month and even more so from January.”
For traders willing to make the opposite bet, the stars could align for AMZU if inflation declines, jobs data improves, or consumers simply display a willingness to spend even if price pressure caused by traded tariffs doesn’t abate.
For more news, information, and strategy, visit the Leveraged & Inverse Content Hub.
