When it comes to volatility, the Nasdaq 100 can give investors an exhilarating roller coaster ride. For short-term traders, this spells an opportunity for a pair of leveraged exchange traded funds (ETFs) from Direxion Investments.
Short-term price changes are especially prevalent in the Nasdaq 100 in the current economic environment marked by high-interest rates. Fed policy should continue to move the markets and the Nasdaq 100, in particular, is susceptible to rate changes.
“Keep in mind that the NASDAQ 100 also is very sensitive to interest rates, which were all over the place during the day,” a Daily Forex article said. “With that being the case, you have to think that the market will continue to see plenty of volatility, especially as traders are still trying to come to grips with the idea that the Federal Reserve is going to stay tighter for longer.”
The article noted that buyers have been coming in when dips present themselves in the Nasdaq 100. Inflation fears are giving them more dips to consume, opening the possibility that the index could see sideways trading action for some time.
“However, this seems to be something that people forget about on a daily basis, as the buyers come back in and pick everything up,” the article added. “There is really strange ability from Wall Street to whistle past the graveyard as it were, as the narrative changes almost on a daily basis, but it is almost always something bullish. Reality may or may not hit, but right now it looks like we are probably going sideways.”
Trade a Sideways Nasdaq 100
Even if the index continues trending sideways, traders can take both sides — whether they’re bullish or bearish on the tech sector. When markets trend lower, they can consider the Direxion Daily Technology Bear 3X ETF (TECS), which seeks daily investment results equal to 300% of the inverse (or opposite) of the daily performance of the Technology Select Sector Index, which is provided by S&P Dow Jones Indices and includes domestic companies from the technology sector.
When going long, traders can use the Direxion Daily Technology Bull 3X ETF (TECL). Several tech companies are trying to stay afloat with cost-cutting measures this year, which could potentially translate to future strength, allowing traders to profit from short-term pops in big tech.
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