Short-term traders looking to capitalize on trends may want to take keep increased holiday travel and defense spending in mind during the final months of the fourth quarter.
According to TravelAge West, rising costs are obviously taking a bite out of consumers’ wallets this year. Nonetheless, the holiday travel rush will continue despite the higher costs. As a result, research company Deloitte is expecting demand for global air passenger traffic to grow once the year is said and done.
“According to the International Air Transport Association, demand for global air passenger traffic, measured in revenue passenger kilometers, is expected to grow by 11.6% in 2024 compared with 2023,” Deloitte noted in a report. “As of August 2024, global air passenger traffic was up 11.9% year-to-date, and total capacity, measured in available seat kilometers, increased 10.2% year-to-date.”
As mentioned, geopolitical tensions should add additional momentum for shoring up defensive spending. With a forthcoming presidential election, the winning candidate can bring their own agendas with regard to defense spending, but if the current trend persists, then bullishness could remain.
“In defense, geopolitical tensions continued, pushing countries to increase defense spending,” the report added. “Per the Stockholm International Peace Research Institute, approximately 59 countries were at war in 2022, up by 27 countries compared to 2019. As a result, defense expenditures surpassed US$2.4 trillion in 2023 (most recent data at the time of publication).”
Traders looking to take advantage of these trends may want to build a portfolio of aerospace and defense stocks, but there’s an easier way. Exchange traded funds (ETFs) can allow traders to capture broad industry trends and in the case of Direxion’s leveraged products, they can do so and maximize their profitmaking potential.
Trade the A&D Trend as Travel Increases
With aerospace and defense spending expected to increase, one fund to consider is the Direxion Daily Aerospace & Defense Bull 3X Shares ETF (DFEN ),which is already up over 30% this year. DFEN seeks daily investment results equal to 300% of the daily performance of the Dow Jones U.S. Select Aerospace & Defense Index.
Under the index, aerospace companies will include manufacturers, assemblers and distributors of aircraft and aircraft parts. Under the defense umbrella, companies include producers of components and equipment for the defense industry, such as military aircraft, radar equipment and weapons. Overall, DFEN gives an added diversification that will help traders who want to trade the broad A&D trend and eschew overconcentration risk in selecting individual stocks.
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