Up Over 50%, This Inverse Tech ETF Continues to Shine

From a shining star to a black hole, the technology industry continues to see weakness amid rising inflation. That’s evident in the Direxion Daily Technology Bear 3X ETF (TECS), which is up over 50% for the year.

The Nasdaq 100 provides further evidence of tech’s weakness as the index is down over 20% for the year. It’s an unfamiliar place for investors who’ve been accustomed to seeing nothing but green in tech over the last couple of years.

“The biggest lesson from 2022’s tech blowup is that no change is permanent,” a Barron’s article says. “Complacency is an investor’s worst trait. Even after a decade of tech dominance, fundamentals can quickly shift. And that’s what has happened this year, with the reopening sparking trends with the same speed as the pandemic before it.”

TECS seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the daily performance of the Technology Select Sector Index. The index is provided by S&P Dow Jones Indices and includes domestic companies from the technology sector.

TECS Chart

TECS data by YCharts

Still More Upside in Shorting Tech?

Runaway inflation continues to be the story in the capital markets and eyes will remain on how hawkish the Federal Reserve will be when it comes to tightening monetary policy. Whether weakness will remain in the tech sector is anybody’s guess, but shorting could still have more upside in the basic technical analysis of TECS.

Traders will probably be watching whether that 50-day moving average will cross over the 200-day moving average, signaling the golden cross for more upside in TECS. Looking at the year-to-date chart of TECS, it looks like decision time will come sooner rather than later.

Momentum hasn’t touched past 70 using the relative strength index (RSI), hinting that TECS could have more room to run before hitting overbought territory. If the trend reverses, traders can also use the Direxion Daily Technology Bull 3X ETF (TECL) if a tech rally does take place — the beauty of bullish/bearish ETFs from Direxion that can play both sides.

TECS Chart

TECS data by YCharts

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