Not only did the online shoppers come out for Black Friday, but the bears are also out for brick-and-mortar stores, which saw a 6% drop in sales according to retail analytics company ShopperTrak. If this trend continues to hold through Christmas, it paves the way for gains in the Long Online/Short Stores ETF (CLIX).

“The bears are circling retailers ahead of the holiday season,” a Wall Street Journal article noted. “Short sellers have revived their bets against bricks-and-mortar retailers in recent weeks, taking their most aggressive positions in months. Short positions against the SPDR S&P Retail fund, one of the biggest retail exchange-traded funds, last week hit 441% of the fund’s available shares, due to multiple borrowings by bearish speculators, according to financial-data firm S3 Partners.”

CLIX seeks investment results that track the performance of the ProShares Long Online/Short Stores Index, which consists of long positions in the online retailers included in the ProShares Online Retail Index and short positions in the “bricks and mortar” retailers included in the Solactive-ProShares Bricks and Mortar Retail Store Index.

Fund facts:

  • E-commerce sales are growing at a rapid pace and undermining in-store retail as consumer habits change and shoppers move online. As popular as they may seem now, online retailers like Amazon and Alibaba only account for about 10% of global retail sales, leaving tremendous room for growth.
  • Physical retailers are under immense pressure. Sales have been declining and profit margins are approaching lows not seen since the recession. Over 30 major retailers have declared bankruptcy in the past three years, and longstanding names like J.C. Penney and Macy’s are struggling to remain viable.
  • CLIX combines a 100% long position in retailers that primarily sell online or through other non-store channels with a 50% short position in those that rely principally on physical stores. Investors have the opportunity to benefit from both outperforming online and underperforming physical retailers. The long/short structure also reduces equity market exposure and potentially results in less volatility than long-only equity strategies.

Leveraging Retail Strength

Investors sensing that Black Friday portends to an even bigger wave of sales during Christmas time can look at the he Direxion Daily Retail Bull 3X ETF (NYSEArca: RETL) if their predictions hold up. RETL seeks daily investment results equal to 300% of the daily performance of the S&P Retail Select Industry Index, which is a modified equal-weighted index that is designed to measure performance of the stocks comprising the S&P Total Market Index that are classified in the Global Industry Classification Standard (GICS) retail sub-industry.

RETL, and Direxion’s other leveraged ETFs are ideal for investors looking to:

  • Magnify short-term perspective with daily 3X leverage
  • Go where there’s opportunity, with bull and bear funds for both sides of the trade
  • Stay agile – with liquidity to trade through rapidly changing markets

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