Bullish For Nvidia, AMD? This Fund Offers 3X Leverage And It May Be About To Dip

Author: Melanie Schaffer | July 14, 2023 12:52pm

Direxion Daily Semiconductor Bull 3X Shares (NASDAQ:SOXL) spiked 0.7% on Friday morning before falling to trade mostly flat to Thursday’s close. The ETF recently made another bull break since breaking up from an inside bar pattern, which Benzinga called out on June 28.

The semiconductor sector has been experiencing a bull cycle, with NVIDIA Corporation (NASDAQ:NVDA) flying in blue skies amid reports the company will become an anchor investor in Softbank Group Corp-backed British chip designer Arm IPO. The news has helped to pull Advanced Micro Devices higher.

SOXL is a triple-leveraged fund that consists of a variety of stocks in the semiconductor sector. Advanced Micro Devices, Inc (NASDAQ:AMD) makes up 7.03% of the fund, while Nvidia is weighted at 8.81%.

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Tech stocks, including chipmaker stocks, have also enjoyed bullish price action recently, matching the positive movements seen in the general markets.

On Friday, the S&P 500 looked to be printing a bearish reversal candlestick, however, signaling the local top may be in. An eventual retracement on the index and individual stocks could provide a solid entry for bullish traders and if the move takes place, SOXL offers 3X leverage.

Traders who are bearish on the semiconductor sector can track the Direxion Daily Semiconductor Bear 3X Shares (NYSE:SOXS).

It should be noted that Direxion’s leveraged funds are designed for short-term traders and shouldn’t be held for a long period of time.

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The SOXL Chart: Like the S&P 500, SOXL was looking to print a reversal candlestick Friday, in the form of a gravestone doji, which may signal the next higher high has a card and a retracement is on the horizon. SOXL’s most recent higher low was formed on July 6 at $22.04, and if the uptrend continues, the ETF will print a bullish reversal candlestick above that area on the next dip.

• The ETF could also reverse course off the eight-day exponential moving average (EMA) on its next retracement because the indicator has been guiding SOXL higher since July 10. SOXL has become extended from the eight-day EMA, which also indicates a pull back is on the horizon.
• The downturn from Friday’s high-of-day was taking place on lower-than-average volume, which suggests some bulls are taking profit as opposed to the bears regaining control. Bearish traders want to see big bearish volume come in before feeling confident that SOXL’s bull cycle is complete.
• SOXL has resistance above at $27.30 and $30.57 and support below at $22.12 and $17.66.

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Posted In: AMD NVDA SOXL SOXS