A persistent bullish trade this year has been the semiconductor industry with the S&P 500 Semiconductors Index up over 80% for the year. As semiconductor sales grow, this gives traders various options for bullishness, including 5 ETFs from Direxion.
As reported by Yahoo! Finance, the Semiconductor Industry Association (SIA) reported that global semiconductor sales hit a total of $53.1 billion in August, rising 20.6% from a year ago. On a month over month basis, sales were up 3.5% from July’s $51.3 billion in sales.
Of course, sales are growing exponentially alongside the artificial intelligence (AI) theme, which continues to maintain its momentum. In order for AI to operate to its fullest capacity, it will require the necessary processing power. Thus, as Yahoo reported, the “year-over-year jump in semiconductor sales is the largest percentage gain since April 2022, driven by a 43.9% year-to-year sales surge in the Americas.”
“The global semiconductor market continued to grow substantially in August, hitting its highest-ever sales total for August, and month-to-month sales increased for the fifth consecutive month,” confirmed John Neuffer, SIA president and CEO.
5 Bullish Options
For continued upside in the industry, traders can certainly get exposure to the whole sector using the Direxion Daily Semiconductor Bull and Bear 3X Shares (SOXL). The fund tracks the largest movers and shakers within the industry. Additionally, SOXL seeks daily investment results equal to 300% of the daily performance of the NYSE Semiconductor Index. That index is a rules-based, modified float-adjusted market-capitalization-weighted index that tracks the performance of the 30 largest U.S.-listed semiconductor companies.
Within SOXL are Nvidia, Taiwan Semiconductor, Micron Technology, and Broadcom. If traders want more concentrated exposure to these individual stocks while also looking to maximize profit potential, they have the following single-stock ETFs available:
- Direxion Daily NVDA Bull 2X Shares (NVDU)
- Direxion Daily TSM Bull 2X Shares (TSMX)
- Direxion Daily MU Bull 2X Shares (MUU)
- Direxion Daily AVGO Bull 2X Shares (AVL)
These ETFs can be used in conjunction with the broader-based SOXL as a potential pairs trade. This allows for greater flexibility in trading.
Likewise, traders can also use the inversed Direxion Daily Semiconductor Bear 3X Shares (SOXS) or the associated inverse single-stock ETFs for NVDU, TSMX, MUU, and AVL. For short-term pullbacks, these funds are ideal to trade bearish momentum.
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