Cloud computing fundamentals make this ETF a must-have

VSLoud computing was one of the shining stars during the height of the pandemic, but although the tech sub-sector has seen weakness lately, it should still offer huge growth opportunities for traders to the future.

“As the world emerges from the pandemic, technology companies have been put in a difficult situation,” notes a post by Barron. “They are under pressure to maintain pandemic-era surges, and many of them have struggled to rise to the challenge, including Zoom video communication, Interactive Platoon, Shopify, and Chegg. But there is one pandemic trend that cannot be reversed: cloud computing is here to stay. In fact, the cloud trend is gaining momentum.”

the Direxion Daily Cloud Computing Bear 2X Shares (CLDL) is starting to show signs of strength as technology seems to be making a comeback. The fund is up more than 7% for a month.

CLDL targets 200% of the inverse (or opposite) of the daily performance of the Indxx USA Cloud Computing Index. The fund, under normal circumstances, invests in swap agreements, futures, short positions or other financial instruments which, in combination, provide leveraged inverse (opposite) or short exposure to the index equal to at least 80% of the fund’s net assets (plus borrowings for investment purposes).

Like all leveraged ETFs, these Direxion products are intended only for investors who have a thorough understanding of the risks associated with seeking leveraged investment results and who plan to actively monitor and manage their positions. There can be no assurance that these funds will achieve their objectives.

Another weakness to come?

Taking the opposite direction on trade, the Daily Cloud Computing Bull and Bear 2X Shares ETF (CLDS) is still up more than 20% over the year. With inflation hitting tech stocks in the gut, continued declines could bode well for bearish traders.

Since it takes the inverse approach of CLDL, the fund seeks to achieve 200%, or 200% of the inverse, of the daily performance of the Indxx USA Cloud Computing Index. If inflation can continue to cloud the tech sector, traders can play volatility on the downside with CLDL.

CLDS Chart

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Sherry J. Basler