Traders can cut through the red tape of company research and analysis with funds like the Direxion Fallen Knives ETF (NIFE).
NIFE seeks investment results that track the Indxx US Fallen Knives Index. The fund, under normal circumstances, invests at least 80% of its assets in the securities that comprise the index.
The index is designed by Indxx, LLC to consist of U.S. equity securities that have experienced considerable share price declines over the prior year and have financial health, suggesting that the security has potential for share price recovery in the future. Thus far in 2021, NIFE is up about 15%.
NIFE can also offer exposure to a value comeback. While many investors have fled the growth-fueled equities that have powered the bull run, NIFE looks at companies that may have fallen as of late, but still have the financial wherewithal for future gains.
Is the U.S. Stock Market at a Turning Point?
The flight from high-flying tech stocks, such as the FAANG trade (Facebook, Amazon, Apple, Netflix, Google), is coming as the stock market is reaching an inflection point amid the economic recovery. More investors are looking for stable companies that can withstand a downturn should another hit the market this year.
“The US stock market is at a turning point, and the economic recovery is probably why,” a Business Insider article noted. “For investors holding last year’s hottest stocks, a likely strong rebound in the economy isn’t looking so welcome.”
“After tech giants drove indexes to record highs last year, the prospect of a full reopening has dented the sector’s appeal,” the article added. “Investors began dumping Treasurys at a faster pace in February as the likelihood of a new stimulus package raised expectations for near-term inflation. Cash was pulled from defensive assets and pushed into stocks most likely to thrive during a reopening.”
Traders who want to capture more upside in the stock market can consider the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL). SPXL invests at least 80% of its net assets in financial instruments, such as swap agreements, and securities of the index that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.
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