Last week was downbeat for Wall Street. The S&P 500 (down 0.8%), the Dow Jones (down 0.5%), the Nasdaq Composite (down 0.8%) and the small-cap Russell 2000 (down 2.8%) were all on a volatile ride due to rising rate worries. Meanwhile, retail sales for the month of February came in downbeat, which added to the somber market sentiments. Moreover, the rout in the tech space went on last week (read: Time to Buy These Undervalued Tech ETFs on the Dip?).
Against this backdrop, below we highlight a few inverse/leveraged ETF areas that won last week.
Inverse Energy
Crude oil prices slipped last week due to the continued rise in U.S. crude and fuel inventories, while the lingering effects of the pandemic continue to weigh on the demand outlook. This weighed on the entire energy industry.
Microsectors -3X U.S. Big Oil Index ETN NRGD (up 22.3%), Energy Bear 2X Direxion (up 15.8%), Ultrashort Oil & Gas Proshares(DUG) (up 15.5%) and S&P Oil & Gas Expl Bear 3X Direxion(DRIP) (up 14.1%) were thus the winners last week.
Inverse Small Caps
Small caps recently had a great rally, which probably led to profit-booking last week. Subdued retail sales data for the month of February also played its role in weighing on the small-cap segment. This is because small caps are largely dependent on domestic economic growth.
Inverse leveraged small-cap ETFs like Smallcap Bear 3X Direxion TZA (up 8.4%) and Ultrashort Smallcap 600 Proshares (SDD) (up 6.4%) gained decently last week.
Leveraged Bull Gold Miners
Gold prices gained last week on rising safe-haven demand. Hopes of lower for longer interest rates amid a dovish Fed also supported gold prices. Subdued crude prices are also a plus for gold mining stocks.
Microsectors Gold Miners 3X ETN GDXU (up 7.4%), Junior Gold Mine Bull 2X Direxion JNUG (up 5.6%) and Gold Miners Bull 2X Direxion (NUGT) (up 4.4%) were the winners last week.
Inverse Cloud Computing
As the tech stocks took a beating last week, shares of cloud computing companies —the pandemic winners — also went into a tailspin. Profit booking hurt the space considerably. Direxion Daily Cloud Computing Bear 2X Shares CLDS gained 6.4% last week.
Brazil Bull
Brazil’s central bank hiked interest rates by a larger-than-expected 0.75 point to 2.75% last week, citing inflationary pressure. This move instigated talks that the Brazilian economy is probably heading toward the right direction after a COVID-induced slump. Ultra MSCI Brazil Proshares UBR (up 5.7%) and Brazil Bull 3X Direxion (BRZU) (up 5.5%) were the winning ETFs in this space.
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