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Travel Bans Lifted, Holiday Reunions and Antivirals

November 17, 2021
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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.

Travel and Vacation Stock ETFs are Moving

Signs are emerging that travel is back and travel & vacation stocks have tailwinds to ride in the short term.

Vacation? Visit Family? Let’s Go!

Expedia (EXPE) and Airbnb (ABND) both reported blowout earnings with Airbnb giving positive forward guidance and communicating strong expectations for holiday travel demand. Expedia’s (EXPE) CEO Peter Kern referenced the reopening of the trans-Atlantic travel corridor to fully vaccinated travelers and additional countries announcing new openings to international travelers as two reasons for increased confidence going forward. 

COVID Game Changers for Travel and Vacation Stocks?

Strong results from a study on Pfizer’s (PFE) new COVID pill sent the stock soaring along with cruise lines, airlines and theme parks. Former FDA commissioner Scott Gottlieb called the pill a “game-changer” in the continued fight to put an end to the pandemic. This along with antiviral from Merck (MRK) further the case for the worst of the coronavirus to be behind us.

In other vaccination news, the U.S. FDA authorized the emergency use of the Pfizer-BioNTech Covid-19 vaccine for 5-11 year olds. According to the Wall Street Journal, many parents who had been holding off on air travel are now starting to make vacation plans for after their children are vaccinated, perhaps planning to fly for the first time in more than a year.

What’s the Travel Stock ETF Trade?

In the short-term, the 10-day volatility for the BlueStar Travel and Vacation index has increased relative to its 30-day and 90-day average volatility. On the positive side, the Relative Strength Index* over short and medium-term periods remains below 70, which would indicate an overbought level, implying there may be more room to run for the space

The Direxion Daily Travel & Vacation Bull 2X Shares (OOTO) offers 200% exposure to the BlueStar Travel and Vacation index on a daily basis. Hotels, restaurants, and leisure stocks comprise 58% of this index with airlines making up 19%. The top five holdings are Booking Holdings Inc (BKNG). Marriott International Inc (MAR), The Walt Disney Co (DIS), Airbnb Inc (ABND), and Hilton Worldwide Holdings Inc (HLT).

$OOTO’s Turnover Jumped on the Antiviral News

Source: Bloomberg Finance, L.P., as of November 9, 2021.  A moving average is a calculation used to analyze data points by creating a series of averages of different subsets of the full data set. In finance, a moving average is a stock indicator that is commonly used in technical analysis. Value Traded is the number of shares outstanding times the share price of securities traded.

OOTO Index Holdings as of 09/30/2021

Booking Holdings5.60
Marriott5.41
WALT Disney5.19
Airbnb - Class A4.69
Delta Air Lines3.76
Hilton Inc3.71
Southwest Airlines3.45
Carnival2.89
Trip.com Group Limited2.84
MGM Resorts2.80

*Relative Strength Index: The Relative Strength Index is a momentum indicator that measures the magnitude of recent price changes in order to evaluate overbought or oversold conditions in the price of a stock or other asset.

Leveraged and inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments.

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 direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

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 BlueStar® Travel and Vacation Index (BTOURNTR) is provided by MV Index Solutions GmbH and is comprised of US listed stocks, including depository receipts, of companies that are “Travel and Vacation” companies, as defined by the Index Provider. To be eligible for inclusion in the Index, a company must either (a) derive 25% or more of its revenue from, or devote 25% or more of its annual budget to, operating theme parks and/or hotels or (b) derive 50% or more of its revenue from, or devote 50% or more of its annual budget to the following activities: 1. Hotel accommodations; 2. Commercial airlines; 3. Casino resorts; 4. Hotel time shares; 5. Ski resorts; 6. Cruises; 7. Hotel real estate investment trusts; 8. Performing arts centers; 9. Online travel and event booking; 10. Specialty travel and experiences (such as outer space passenger travel), and 11. Operation of theme parks. One cannot invest in an index.

Direxion Shares Risks – An investment in each Fund involves risk, including the possible loss of principal. The Fund is non-diversified and include risks associated with the Fund’s concentrating its investments in a particular industry, sector, or geography which can increase 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, Natural Disaster/Epidemic and Market Disruption Risk, Counterparty Risk, Rebalancing Risk, Intra Day Investment Risk, Daily Index Correlation/Tracking Risk, Other Investment Companies (including ETFs) Risk, and risks specific to the Consumer Discretionary and Industrials Sectors and the Airline and Travel and Vacation Industries. The market prices of internet securities tend to exhibit a greater degree of market risk and sharp price fluctuations than other types of securities as these securities may fall in and out of favor with investors rapidly, which may cause sudden selling and dramatically lower market prices. Please see the summary and full prospectus for a more complete description of these and other risks of the Fund.

Distributor for Direxion Shares: Foreside Fund Services, LLC.