All three major indexes have reached record highs recently with the Nasdaq Composite being the most recent as it rode the strength of tech-focused equities to a new high in Tuesday’s trading session. Is the current market environment, however, creating an overbought scenario and if so, can it stay this way for U.S. equities?

All this creates an opportunity for investors to capitalize on the Direxion FTSE Russell US Over International ETF (NYSEArca: RWUI).

“This market is grinding higher — yes, it’s overbought, but markets that get overbought can stay overbought for an extended period,” Craig Johnson, technical market strategist for Piper Jaffray, said. “This is the exact opposite of what we saw last year. The Fed is now easing or neutral, and they are expanding their balance sheet. Trade war concerns are subsiding. We are not breaking down. We are breaking out.”

Other analysts say these overbought conditions could present a problem, particularly when it comes to smaller cap indexes.

“The danger here is that eventually, these overbought large-cap indices (S&P 500 DJIA; etc.) will have to be reconciled against lagging small-cap benchmarks (like the Russell 2000 and Smallcap 600) — which have thus far failed to make new recovery highs.” wrote Dan Wantrobski, technical strategist at Janney Montgomery Scott. “This non-confirmation out of the small/midcap area is creating a ‘negative divergence’ of sorts. In the past, such divergences have been resolved via corrections — although the timing of such is difficult to pin down at this time.”

As for RWUI, the fund features:

  • Seeks investment results, before fees and expenses, that track the Russell 1000®/FTSE All-World ex-US 150/50 Net Spread Index (the “index”).
  • The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in securities that comprise the Long Component of the index or shares of ETFs on the Long Component of the index.
  • The index measures the performance of a portfolio that has 150% long exposure to the Russell 1000® Index (the “Long Component”) and 50% short exposure to the FTSE All-World ex-US Index (the “Short Component”).

Investors looking to play the other side can use the Direxion FTSE International Over US ETF (NYSEArca: RWIU) to capitalize on international equities will outdoing U.S. equities. RWIU seeks investment results, before fees and expenses, that track the FTSE All-World ex US/Russell 1000 150/50 Net Spread Index, which measures the performance of a portfolio that has 150 percent long exposure to the FTSE All-World ex US Index and 50 percent short exposure to the Russell 1000® Index.

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