Traders have been feeling the ebb and flow of the markets with volatility as of late, but that only paves the way for trades in sectors like utilities and consumer discretionary.
In particular, market movements have been evident in the Direxion Daily Utilities Bull 3X Shares (UTSL) and the Direxion Daily Consumer Discretionary Bull 3X ETF (WANT). With the triple leverage of both funds, traders have the opportunity to amplify their gains when their bullish notion is strong.
Thus far, the past five days have been for the bulls. UTSL is up 13% while WANT is up 9% — both highlighting the recovery in the major stock indexes after inflation fears and rising yields resulted in a dismal January for equities.
UTSL seeks daily investment results, before fees and expenses, of 300% of the daily performance of the Utilities Select Sector Index. The fund invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, 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.
WANT seeks daily investment results equaling 300% of the daily performance of the Consumer Discretionary Select Sector Index. Both ETFs are ideal for short-term trades to capitalize on daily market moves as opposed to a long-term hold.
Long-Term Chart Could Mean Strength Overall
Both UTSL and WANT present a dichotomy for traders to consider when looking at potential market plays. Utilities represent things consumers need, while consumer discretionary items make up non-essential goods and services — things people want rather than need (hence, the WANT ticker).
Either way, both have been trending higher in the long term — in a one-year time frame, UTSL is up 23% and WANT is up 35%. Towards the end of 2021, WANT pushed above an 80% gain at one point before falling back down to earth, possibly fueled by a holiday retail surge.
With the prices of goods and services rising due to inflation, both ETFs could serve as a hedging tool. Because of their triple leverage, however, only advanced traders should consider these funds.
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