The default play for traders in 2023 may be to simply bet on sectors that were hit the hardest in 2022 and hope for a dead cat bounce. However, in a market still full of unknowns, some precaution is necessary, so here are a few leveraged exchange traded funds (ETFs) traders may want to consider.
While it’s tempting to play sectors with the potential to turn around like tech, there are also sectors to consider that can thrive whether there’s a repeat downturn performance of 2022 or if there’s a trend reversal to the upside. As such, healthcare is a prime consideration with ETFs like the Direxion Daily Healthcare Bull 3X ETF (CURE), which seeks daily investment results equal to 300% of the daily performance of the Health Care Select Sector Index.
The rising population and improved medical technology is causing individuals to live longer. As such, the healthcare system will be forced to take care of an aging population, which could help drive innovative technologies in administering care.
The index includes domestic companies from the healthcare sector, which includes pharmaceuticals, healthcare equipment, and supplies; healthcare providers and services; biotechnology; life sciences tools and services; and more. These sub-industries have all been affected by the pandemic in some form or fashion, giving traders dynamic opportunities to play the market.
Another sector that can thrive in most economic backdrops is utilities — the lights need to stay on regardless of whether the economy is growing or slowing. Traders can play that sector with triple the leverage using the Direxion Daily Utilities Bull 3X Shares (UTSL).
UTSL seeks daily investment results equal to 300% of the daily performance of the Utilities Select Sector Index. That extra juice from the triple exposure could amplify profits should the utilities sector roar back in 2023, especially if a safe haven scramble takes place if the U.S. economy enters a recession.
1 Comeback Play Worth Noting
The aforementioned ETFs add caution when proceeding into the market for 2023, but traders itching for a comeback play may want to consider the retail sector. If the U.S. Federal Reserve manages to tame inflation and, more importantly, stave off a recession, consumers may feel more confident to spend more.
That could especially be the case when it comes to the growth of online retail. More consumers heading online to purchase goods and services should continue to be a revenue driver for the retail sector in the new year.
“Yardeni Research calculates that internet & direct marketing retail sector revenues will have grown 8.2% in 2022 when all is said and done,” a Markets Insider report noted. “Sector-wide revenue growth is anticipated to reach 10.4% in 2023, which should drive a capital influx in 2023.”
That said, traders can take a look at the Direxion Daily Retail Bull 3X ETF (RETL). RETL seeks daily investment results of 300% of the daily performance of the S&P Retail Select Industry Index.
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