Up, Down, or Sideways: How to Bet on the S&P 500 | ETF Trends

As inflation fears continue to keep the major indices at bay, traders can play the volatility with funds like the Direxion Daily S&P 500 Bear 1X Shares (SPDN).

A vaccine rollout and stimulus dollars are helping to boost an economic recovery. However, too much of anything can lead to issues; in this case, it could be runaway inflation.

The federal government, in particular, got a warning alarm from one of banking’s biggest names.

“The White House on Wednesday defended President Biden’s sweeping $4 trillion spending plans, despite a warning from JPMorgan Chase CEO Jamie Dimon that the unprecedented levels of government stimulus could lead to runaway economic growth,” a Fox Business report said.

“While testifying before the Senate Banking Committee, Dimon – who leads the nation’s largest bank by assets – raised concerns over potential U.S. inflation and suggested the Federal Reserve may need to raise interest rates sooner than expected to tamp down rising prices,” the report said further. “Dimon said he expects inflation to climb ‘considerably higher’ than 1.6%, thanks to massive amounts of federal spending and easy monetary policies.

5-Year, 5-Year Forward Inflation Expectation Rate Chart

Inflation fears have been sparking bouts of volatility in the market as of late. SPDN can be used to help scalp profits while the S&P 500 pushes lower on down days.

SPDN seeks daily investment results, before fees and expenses, of 100% of the inverse (or opposite) of the daily performance of the S&P 500® Index. The fund, under normal circumstances, invests in swap agreements, futures contracts, short positions or other financial instruments that, in combination, provide inverse (opposite) or short exposure to the index equal to at least 80% of the fund’s net assets (plus borrowing for investment purposes).

SPDN Chart

Trading the Other Side

Of course, traders can always take the other side when inflation fears subside. In that case, traders can take full advantage with triple leverage offered by the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL).

SPXL, 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.

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