Mid cap equities can give investors a healthy median between large caps and small caps. Further still, investment gains in the Direxion Daily Mid Cap Bull 3X Shares (MIDU) have been anything but middling.
The fund is up almost 50% year-to-date and has grown 150% within the past year. While MIDU and other leveraged funds are ideal for the short-term, mid cap equities in general have been an ideal play for buy-and-hold investors.
“Large-cap stocks like those in the Dow Jones Industrial Average might get all the glory, but the best mid-cap stocks often deliver superior returns over the long haul,” a Kiplinger article explained.
Mid caps offer the best of both worlds when it comes combining the market stability of large caps and the growth potential of small caps. Traders who want less volatility than small caps can look to MIDU as a prime alternative.
“Stocks with more middling market values often get lost in the media shuffle. But they shouldn’t,” the Kiplinger article added. “They typically offer investors the best of both worlds: less volatility than small-cap stocks but greater growth prospects than their large-cap brethren. And in fact, a dollar invested in mid-caps in 1978 would be worth $199 today, vs. $181 for small caps and $139 for large caps on a total-return basis (price appreciation plus dividends.)”
MIDU seeks daily investment results, before fees and expenses, of 300% of the daily performance of the S&P MidCap 400 Index. The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, and 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.
Consolidating or Ready to Rocket Higher?
From a technical standpoint, MIDU has dipped below its 50-day moving average, which could suggest a consolidation phase for this leveraged ETF.
The fund is still above its 200-day moving average, which could mean the long-term movement still points to an uptrend. Momentum via the relative strength index (RSI) sits right in the middle of overbought and oversold levels, also meaning a consolidation phase could be taking place in the coming market sessions.
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