After a rough-and-tumble 2022 for the capital markets, things might only be able to get better from here. However, some experts on Wall Street are forecasting more pain ahead for the markets, according to a Markets Insider article. The S&P 500 is already down 15%, but Wall Street isn’t so optimistic when it comes to 2023.
“Three top Wall Street banks are singing from the same downbeat hymn sheet, as each predicts US stocks could fall by more than 20% next year,” the article said.
“For Bank of America, a Federal Reserve-induced liquidity crisis could put pressure on the S&P 500 stock index,” the article added. “Meanwhile, Morgan Stanley and Deutsche Bank say lower earning outlooks and a US recession could trigger the selloff.”
From a technical standpoint, the moving averages suggest that things are a little more encouraging. The S&P 500 has moved up above the 50-day moving average, signaling that short-term weakness isn’t in sight.
Additionally, the index is slightly above the 200-day moving average, which could mean upside is coming in the long-term horizon. However, applying a relative strength index (RSI) filter shows that the index could be heading into overbought territory, hinting at a potential sell-off to come.
This is not only welcoming news for long-term traders. For those willing to play both sides, there’s gains to be had whether the S&P 500 exhibits upside or downside. This can be accomplished with products from Direxion Investments that take advantage of bearish and bullish inclinations.
Ride the Roller Coaster With 2 ETFs
When it comes to trading the S&P 500, investors don’t have to wait idly and buy the dips, then wait for the next bullish move higher. Advanced investors can trade both bullish and bearish moves using leveraged ETFs.
To profit on the downside in the short term, traders can use the Direxion Daily S&P 500 Bear 3X ETF (SPXS). SPXS seeks daily investment results equal to 300% of the inverse of the daily performance of the S&P 500 Index.
On the flip side, when the S&P 500 rises, traders can play to the upside with the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL). Both ETFs offer thrice the leverage, so only seasoned traders should use these products.
For more news, information, and analysis, visit the Leveraged & Inverse Channel.