Earnings season is back in full swing after a volatile quarter, and it could get even more volatile, especially for technology companies, which is a good thing for traders.
If big tech can pull a rabbit out of its hat given headwinds like the semiconductor shortage, it would be a boon to bullish tech traders.
“US stocks have had a turbulent ride over the past six weeks,” a Direxion Investments The Xchange blog post said. “Traders may need to strap in for this earnings season.”
“According to some estimates, companies in the S&P 500 are expected to report quarterly earnings that are nearly 28% higher than the same quarter last year,” the blog post added further. “With only about 12 weeks left in 2021, traders will be focused on the numbers versus expectations. Few metrics may matter more than margins. With the continued impact from supply chain disruptions, and accelerating inflation, squeezing the bottom line, more companies may follow the trend of revising down earnings guidance.”
Two ETFs to Trade Tech
If traders are feeling bullish on earnings for tech, they have a pair of options that they can keep in their toolbox, particularly if they want leverage involved. One ETF is the Direxion Daily Technology Bull 3X ETF (TECL).
With its triple leverage, TECL is certainly not for the weak of heart. The fund seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Technology Select Sector Index.
The other option, the Direxion Daily Select Large Caps & FANGs Bull 2X Shares (FNGG), is more niche. FNGG gives traders targeted exposure to the FANG stocks without having to hold separate positions in each stock.
The fund seeks to achieve 200% of the daily performance of the ICE FANG 20 Index, which provides exposure to highly-traded technology and technology-enabled companies, namely the FANG stocks. The fund is already up 16% after debuting less than a month ago.
“Originally conceived as four transformative, high growth stocks – Facebook, Amazon, Netflix and Google (now known as Alphabet) — Apple (AAPL) and Microsoft (MSFT) quickly joined the fold due to their ‘FANG-like’ qualities. The ICE FANG 20 Index includes these six stocks, along with 14 others carrying similar characteristics, including high average daily volume, high sales growth and the premium that market is placing on the businesses,” said David Mazza, managing director and head of product at Direxion. “FNGG allows traders to take a bold position in a basket of 20 well-known, highly-traded growth stocks across the Technology, Media & Communications and Consumer Discretionary sectors.”
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