Liquidity is one of the most important characteristics of exchange-traded funds (ETFs). It measures how easily investors can buy or sell ETF shares without significantly affecting their market price. In simpler terms, a liquid ETF enables quick transactions at prices that closely align with the true value of its underlying assets.
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A key factor influencing liquidity is trading volume. Generally, higher trading volumes indicate a greater number of buyers and sellers in the market, which facilitates the ease of completing transactions. As a result, ETFs with substantial trading activity tend to show narrower bid-ask spreads, reducing the cost of trading. The bid-ask spread is the difference between the highest price a buyer is willing to pay for an ETF (the bid) and the lowest price a seller is willing to accept (the ask).
Considering this scenario, let us look at three top ETFs that are trading at relatively higher volumes compared to their average volumes over the past three months, using the TipRanks ETF Screener.
MSTZ ETF Draws Interest Amid MSTR’s Rise
The T-Rex 2X Inverse MSTR Daily Target ETF (MSTZ) provides inverse exposure to the daily price movement of MicroStrategy stock (MSTR) and was launched earlier this year. This ETF is trading at more than 10 times its average trading volumes over the past three months. The ETF could be attracting keen interest from investors looking to bet against MSTR. This is because MSTR has soared by more than 75% over the past month as its crypto holdings have increased. In addition, the price of Bitcoin has jumped by more than 40% over the same time period. However, over the past three months, the MSTZ ETF has plunged by more than 90%.
Overall, in the one-day time frame, the MSTZ ETF is a Sell, according to TipRanks’ technical analysis tool. This is based on 10 Bearish, two Neutral, and four Bullish signals.
Betting Against Tesla with TSLZ and TSLQ
The other two ETFs that have seen a surge in relative volumes are, once again, both inverse ETFs betting against Tesla (TSLA) stock. These ETFs include the T-Rex 2X Inverse Tesla Daily Target ETF (TSLZ) and the Tradr 2X Short TSLA Daily ETF (TSLQ). Both ETFs are trading at more than twice their average volumes over the past three months. This rise in investor interest could be due to Tesla being perceived as largely benefiting from the results of the U.S. elections, with Musk firmly backing President-elect Trump. Year-to-date, TSLZ and TSLQ have declined by more than 80% and 70%, respectively.
Overall, in the one-day time frame, the TSLZ ETF is a Sell, according to TipRanks’ technical analysis tool. This is based on 14 Bearish, three Neutral, and five Bullish signals.
Overall, on the one-day time frame, the TSLZ ETF is rated a Sell, according to TipRanks’ Technical Analysis tool. This is based on 14 Bearish signals, three Neutral signals, and five Bullish signals.
