Skip to Main Conent
xchange logo

Can PMI and DUSL Manufacture a Win?

September 17, 2021
Traders watch the Manufacturing Purchasing Managers' Index (PMI) release and trade Industrial ETFs.

Editor’s note: Any and all references to timeframes longer than one trading day are for purposes of market context only, and not recommendations of any holding timeframe. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don’t have the resources, time or inclination to constantly monitor and manage your positions, leveraged ETFs are not for you.

In this Xchange, we will discuss:

  • What is the Manufacturing Purchasing Managers’ Index (PMI)?
  • Why PMI is Important
  • What to Expect From the September Release of the PMI
  • What Are Traders Watching in the PMI Report?
  • The Industrial ETF Trading Opportunity – Daily Industrials Bull 3X Shares ETF (DUSL)

What is the Manufacturing Purchasing Managers’ Index (PMI)?

On Thursday, September 23rd, traders await the release of the Manufacturing Purchasing Managers' Index (PMI). The Index incorporates survey results provided by manufacturing firms throughout the country. A reading above 50 suggests the manufacturing sector is expanding, while a reading below 50 suggests the manufacturing sector is in contraction.

Why is PMI Important?

Policymakers and traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, rather than waiting for the hard data to emerge.

What to Expect from the September Release of the PMI

Although it’s true that manufacturing accounts for a far lower percentage of economic output than services, it is far more cyclical. That’s why traders find it to be a more useful indicator of where in the economic cycle the economy is currently situated. But the real key for short-term traders is the strength or weakness of the number versus what’s been forecasted.

What Are Traders Watching in the PMI Report?

In August, the index came in at 61.2, which was below the forecasted number of 62.5, and a full 2.2 points below the previous release.

Manufacturing Purchasing Managers' Index (PMI) August release: Actual 61.2, Forecast 62.5, Previous 63.4

Some see this waning as a short-term post-pandemic lull. Due to the start and stop nature of pandemic recovery, the basic materials providers haven’t been able to keep up with demand due to staffing challenges. Order deliveries have been lagging. So should the PMI index move higher than the forecast, the indication may be that industrials, and perhaps the broader indexes may do the same in the weeks to come.  

The Industrial ETF Trading Opportunity – Daily Industrials Bull 3X Shares ETF (DUSL)

For the experienced trader who’s looking for more risk and volatility, one option to bet on the short-term surprise in PMI, is the Direxion Daily Industrials Bull 3X Shares ETFs (DUSL). DUSL seeks daily investment results, before fees and expenses, of 300% or 3X the performance of the Industrial Select Sector Index. There is no guarantee the fund will meet its stated investment objective.

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-301-9214 or visit our website at A Fund’s prospectus and summary prospectus should be read carefully before investing.

CUSIP Identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by Standard and Poor’s Financial Services, LLC, and are not for use or dissemination in any manner that would serve as a substitute for a CUSIP service. The CUSIP Database, © 2011 American Bankers Association. “CUSIP” is a registered trademark of the American Bankers Association.

Shares of the Direxion Shares are bought and sold at market price (not NAV) and are not individually redeemed from a Fund. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 pm EST (when NAV is normally calculated) and do not represent the returns you would receive if you traded shares at other times. Brokerage commissions will reduce returns. Fund returns assume that dividends and capital gains distributions have been reinvested in the Fund at NAV. Some performance results reflect expense reimbursements or recoupments and fee waivers in effect during certain periods shown. Absent these reimbursements or recoupments and fee waivers, results would have been less favorable.

The “Industrials Select Sector Index” is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Rafferty Asset Management, LLC (“Rafferty”). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Rafferty. Rafferty’s ETFs are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the Industrials Select Sector Index.

Investing in a Direxion Shares ETF may be more volatile than investing in broadly diversified funds. The use of leverage by a Fund increases the risk to the Fund. The Direxion Shares ETFs are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk, consequences of seeking daily leveraged investment results and intend to actively monitor and manage their investment.

Direxion Shares Risks – An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund concentrating its investments in a particular industry, sector, or geographic region which can result in increased volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause their price to fluctuate over time. Risks of the Fund include Effects of Compounding and Market Volatility Risk, Leverage Risk, Market Risk, Market Disruption Risk, Aggressive Investment Techniques Risk, Counterparty Risk, Intra-Day Investment Risk, Daily Index Correlation/Tracking Risk, Other Investment Companies (including ETFs) Risk, and risks specific to the securities of the Industrials Sector. Stock prices of issuers in the industrials sector are affected by supply and demand both for their specific product or service and for industrials sector products in general. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.

Distributor for Direxion Shares: Foreside Fund Services, LLC.

  • Leveraged & Inverse ETFs
  • XChange Blog