The effects of the pandemic haven’t let up, with the introduction of the Omicron variant forcing social distancing measures once again, which should benefit homebuilders.
One leveraged ETF in particular, the Direxion Daily Homebuilders and Supplies Bull 3X Shares (NAIL), has been a boon for traders who identified the upside with its almost 150% year-to-date gain. With COVID-19 cases experiencing a winter surge, homes will once again be the safe haven for work and play.
According to a Kiplinger’s article, the “biggest long-term changes that COVID will make in our lives are to shift activities, whenever possible, away from interior spaces and to make us more homebound.”
In the meantime, real estate prices haven’t been letting up. With interest rates still relatively low despite the Federal Reserve signaling that rate hikes are to come, mortgage financing can still benefit prospective homeowners.
As such, demand for more homes will translate into strength for homebuilders. With the pandemic still left to deal with, this only helps the case for homebuilders.
“The big winners of the COVID shift, then, will be homebuilders,” the article adds. “The shares of most of them have already risen since the pandemic began but, in my view, by not nearly enough to make them unattractive to long-term investors.”
NAIL Exhibiting Strong Momentum
NAIL seeks daily investment results of 300% of the daily performance of the Dow Jones U.S. Select Home Construction Index. The index measures U.S. companies in the home construction sector that provide a wide range of products and services related to homebuilding, including home construction and producers, sellers, and suppliers of building materials, furnishings, and fixtures.
NAIL has been trading above its 50- and 200-day moving averages, showing signs of strength in the near term as well as the long term. Momentum also looks strong with the relative strength index (RSI) registering a 61.09 on the one-year chart, which is heading upwards into overbought levels.
“The Daily Homebuilders & Supplies Bull 3X Shares (NAIL) ETF hit new highs on December 2nd after breaking through resistance set in May,” a Direxion Investments Xchange newsletter says. “It just revisited those levels in November─a possible bullish sign for traders.”
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