Holiday Shopping Data Lifts Leveraged Retail ETF

After scuffling for much of this year, traditional brick-and-mortar retailers soared in advance of the holiday shopping season, a jump that was confirmed Tuesday with some bullish retail data.

“MasterCard's SpendingPulse report on national retail sales, across all payment types, said retail sales during the holiday season increased 4.9 percent from a year ago, the fastest pace of growth since 2011,” reports MarketWatch. “Dollars spent this season set a record, helped by an 18.1 percent jump in online shopping and heavy early-season promotions.”

That news sent the Direxion Daily Retail Bull 3X Shares RETL higher by 4 percent yesterday, extending the leveraged retail exchange traded fund's (ETF) gain over the past month to just over 40 percent.

Shopping With RETL

RETL is the dominant name among leveraged retail ETFs. The Direxion fund is designed to deliver triple the daily returns of the equal-weight S&P Retail Select Industry Index, one of the most widely followed retail benchmarks.

Although no single stock accounts for more than 1.5 percent of RETL's underlying index, traders should still recognize what type of bet they are making with this leveraged ETF. Specifically, RETL's index devotes about three-quarters of its combined weight to specialty and Internet retailers.

The combination is working. With Tuesday's gain, RETL is up more than 16 percent since the start of December, making it one of Direxion's best-performing leveraged bull funds on a month-to-date basis. RETL also hit a new 52-week high yesterday.

Taking Profits

Data suggest traders have been taking profits in the resurgent RETL as the ETF is averaging daily outflows of nearly $670,000 over the past month, according to issuer data.

However, that does not diminish the allure of RETL as a short-term trade around marquee economic data releases, such as retail sales, jobs reports and consumer spending.

On Tuesday, RETL closed 39 percent above its 200-day moving average, bolstering a positive technical outlook for the leveraged retail ETF.

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