When volatility spikes in the S&P 500, that’s a green light for traders to get their tools ready. Direxion Investments has two leveraged ETFs to utilize.
To profit on the downside in the short term, traders can use the Direxion Daily S&P 500 Bear 3X ETF (SPXS). SPXS seeks daily investment results equal to 300% of the inverse of the daily performance of the S&P 500 Index.
On the flip side, when the S&P 500 rises, traders can play to the upside with the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL). Both ETFs offer thrice the leverage, so only seasoned traders should use these products.
Whether it’s inflation, geopolitics, or more likely a combination of both, the bears have been winning so far in 2022. SPXS is up about 32%, while SPXL is down about that same percentage.
Bulls Winning the Past 12 Months
However, in the long-term horizon, it’s the bulls who have had the upper hand. A sustained recovery in 2021 helped push SPXL higher, but inflation reared its ugly head in 2022.
Rising energy prices, particularly for oil, are causing investors to fret. Thoughts of stagflation are also entering the capital markets, which is adding to the heavy dose of volatility investors have been seeing as of late.
“The equity market continues to take its cues from changes in commodity prices, namely oil,” said Kathy Bostjancic, chief U.S. economist at Oxford Economics. “Trading will continue to be volatile and rally when prices retreat, but overall the prospect of oil and non-energy prices remaining very high casts a cloud overall the outlook for economic activity and the equity market.”
Nonetheless, whether the S&P 500 goes up or down, traders can use SPXS and SPXL accordingly. Of course, with their added leverage, only seasoned investors should use these products.
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