An uptick in COVID-19 cases isn’t holding the S&P 500 down the way it did last year, which is strengthening the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL).

This strength could continue through the rest of the year, unless the pandemic spirals out of control. However, with the push for more vaccinations and booster shot developments underway, the pathways could open up for more highs in the S&P 500.

Additionally, a confluence of other factors could likely feed into more strength for the S&P 500 for the rest of 2021.

“Major stock market indexes extended a streak of record highs Wednesdays as investors continued to gush over Federal Reserve stimulus measures, blowout corporate earnings and the promise of a strong economic recovery—factors that have prompted many experts in recent days to lift their stock-market expectations, with some forecasting the S&P 500 could climb nearly 10% by year’s end,” a Forbes article explained.

SPXL, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, securities of the index, ETFs that track the index, and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.

SPXL Chart

Playing a Potential Pullback

With the economy gaining steam, pullbacks will eventually happen. Looking ahead, if the Federal Reserve decides it’s time to take the training wheels off and taper its bond purchases amid a strong economy, traders can play a pullback with the Direxion Daily S&P 500 Bear 3X ETF (SPXS).

“The stock market remains excessively bullish and is still ripe for its first 5% pullback in almost a year as a potential peak in stimulus is here,” Oanda Senior Market Analyst Ed Moya said, according to the Forbes article. “Fed Chair Powell’s [Friday] speech will likely emphasize the economic recovery is well past the crisis and that the central bank will shortly announce they are ready to taper asset purchases.”

SPXS seeks daily investment results equal to 300% of the inverse of the daily performance of the S&P 500 Index. The fund, under normal circumstances, invests in swap agreements, futures contracts, short positions or other financial instruments that, in combination, provide inverse (opposite) or short leveraged exposure to the index equal to at least 80% of the fund’s net assets (plus borrowing for investment purposes).

For more news and information, visit the Leveraged & Inverse Channel.