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Energy Momentum and Inverse Biotech: Two ETFs Trading with Outsized Volume

Zacks Equity Research

Major U.S. benchmarks registered the biggest decline in around a month following disappointing third-quarter results from Alcoa. A strengthening U.S. dollar, which was boosted by rising speculations of a rate hike in December, also weighed on markets. Moreover, a drop in oil prices had a negative impact on investor sentiment. Among the top ETFs, investors saw SPY gain nearly 1.3%, while DIA decreased nearly 1.1% and QQQ fell about 1.4% on the day.

Two more specialized ETFs are worth noting in particular though as both saw trading volume that was far outside of normal. In fact, in the most recent trading session, both these funds experienced volume levels that were more than double their average. This could make these ETFs the ones to watch out for in the days ahead to see if this trend of extra interest continues:

PXI: Volume 3.90 times average

This energy momentum ETF tracking the DWA Energy Technical Leaders Index was in focus yesterday as roughly 54,190 shares moved hands compared with an average of roughly 14,590 shares. PXI declined over 0.9% on the day.

Oil prices declined on Tuesday after the International Energy Agency reported that the Organization of the Petroleum Exporting Countries boosted crude production by 160,000 barrels per day to hit a record high level of 33.64 million barrels per day last month. This was one of the main reasons behind the energy ETF’s decline. However, in the last one-month period, PXI was up 4.2%. The fund has a Zacks ETF Rank #5 (Strong Sell).

BIS: Volume 3.10 times average

This inverse biotech ETF was under the microscope on Tuesday as nearly 1.07 million shares moved hands. This compares to an average trading volume of 360,510 shares and came as BIS surged 7.4% in the session.

The iShares Nasdaq Biotechnology dropped 3.8%, witnessing the worst one-day performance since the Brexit referendum, on 24.8% plunge in shares of Illumina, which reduced its outlook for third-quarter revenues. Moreover, increasing chances of Hillary Clinton’s win in the upcoming Presidential election weighed on the sector. BIS that seeks to follow the inverse of biotech sector’s performance gained from this scenario. Also, in the last one-month period, BIS was up nearly 5.8%.

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