With the help of Apple gaining almost 50% this year, the Direxion Daily AAPL Bull 1.5X (AAPU) has risen over 70% thanks to the extra 50% leverage inherent in the fund.
Apple’s strength is also a byproduct of a broader rally in big tech. The Nasdaq-100 is up almost 40% for the year as the capital markets expect the Fed to pause on interest rate hikes as inflation starts to dissipate.
Even as macroeconomic conditions improve, Apple has also proved its mettle in the eye of the storm. When recent volatility from bank collapses created market jitters, Apple stock stayed relatively stable given its strong fundamentals.
“It was viewed as a safe haven amid turmoil in the banking sector earlier this year, with investors embracing its balance-sheet strength, capital-return program, and durable revenue streams as positives, while Apple’s recent results topped expectations and eased concerns about its growth prospects,” a Bloomberg article said, adding that investors have also been optimistic when it comes to the iPhone maker’s growth prospects, particularly when it comes to retail chain expansion.
“Apple has a roadmap people are comfortable with, it has unbelievable cash flow, and you can’t do better than this incredible business model,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services. “We’re seeing people come back following the bear market, and Apple is just one of the stocks where investors are comfortable owning it whether it goes up or down, because they’re confident they’ll make money over the long run.”
No Pause on Market Rally
In the meantime, the major market indexes like the S&P 500 continue to reach new 13-month highs, per a CNBC article. If that trend persists, traders should consider the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL), which offers triple exposure to the S&P 500.
″[The Fed] will buy themselves the maximum amount of optionality by signaling at least one further hike by the end of 2023, aligned with market expectations, and will guide towards a ‘skip’ instead of an extended pause to sit and observe the effects of raising rates 5% since the beginning of the hiking cycle,” said Gargi Chaudhuri, head of iShares investment strategy, Americas, at BlackRock.
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