Microsoft Continues to Ride the Big Tech Rally Wave

Up just over 40% for the year, Microsoft is narrowly outpacing the broader big tech rally with the Nasdaq-100 up around 38%. The software giant could keep riding the wave, giving bullish traders opportunities in the Direxion Daily MSFT Bull 1.5X Shares (MSFU).

One of the sub-sectors in big tech that’s offering prospective growth opportunities is artificial intelligence (AI). Microsoft’s partnership with OpenAI provides substantive notice to investors that the company is serious about competing with the other big tech players when it comes to bolstering its own AI capabilities.

From a macroeconomic standpoint, the prospect of lower inflation and a decelerated pace of Fed rate hikes can continue to feed into Microsoft’s rally alongside big tech. That combination of fundamentals in its potential AI growth as well as economic tailwinds could keep Microsoft pushing higher.

“There is not only the potential for shares to hold onto their year-to-date gains,” InvestorPlace said. “There is ample room for the stock to add to these gains over the next few years.”

Traders looking at the big picture can also get more broad exposure to tech’s rally with the Direxion Daily Technology Bull 3X ETF (TECL). With its triple leverage, TECL is certainly not for the weak of heart, given that the fund seeks daily investment results equal to 300% of the daily performance of the Technology Select Sector Index.

When Big Tech Loses Steam

At some point, the laws of gravity will also apply to the big tech rally. Once the steam runs out of momentum, bearish traders can take advantage.

Even if the long-term trajectory still shows strength in big tech, the short-term drawdowns can offer opportunities for using inverse ETFs. This allows traders to play both sides of the market trend, regardless of whether it’s up or down.

“The real point is that there is some possibility that tech stumbles, or that it won’t be able to sustain its recent performance,” a Barron’s article said. “Other opportunities in the market might look better, such as economically sensitive stocks outside of tech, which are positioned to thrive as the Fed eventually stops raising rates, allowing demand for goods and services to take off.”

“‘Sell tech’ isn’t a wild idea by any stretch,” the article concluded.

To play short-term moves to the downside, traders can also use the Direxion Daily MSFT Bear 1X Shares (MSFD). For the broader move, traders can use the bearish Direxion Daily Technology Bear 3X ETF (TECS).

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