January Inflation Report Put These 4 ETFs on a Roller Coaster Ride

Inflation reports will certainly move the markets in 2023 the same way they did in 2022 — at least until the U.S. Federal Reserve feels it has inflation relatively under control, but that could take some time. The latest inflation report put a number of leveraged exchange traded funds (ETFs) on a roller coaster ride.

Volatility could be around for some time this year as inflation stays relatively high. That only opens up opportunities for traders to go long or short with leveraged ETFs that can take advantage of both sides.

“While there were no major surprises in today’s CPI reading, it is a reminder that while inflation has peaked it could be a while before we see it moderate to normal levels,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.

“The question remains if inflation will be able to fall to the Fed’s target levels with the labor market as tight as it currently is,” he added. “That could be the recipe for a soft landing, but it remains to be seen when the Fed will shift away from rate hikes and if the labor market will lose its resiliency.”

In the meantime, traders can ride the S&P 500 with funds like 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.

For potential downside in the market, they can take a look at the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL). It’s an ideal tool to trade the downside in the S&P 500 with added leverage to maximize gains.

Trade Tech With Leverage

Tech stocks continue to be major movers, particularly after last year’s broad weakness in the sector. The expectation is that they’ll come back this year, but given that inflation is still relatively high, a lot of market fluctuations could take place.

That said, 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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