Tariff-ied Yet? Trader’s Dream, or Nightmare? SPXL or SPXS
Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.
It’s been a choppy start for equity markets in 2025, with headline risks as elevated as they’ve been in recent memory, it’s been a unique environment for aggressive short-term traders. But if stocks start to break in one direction or another, it may provide an even greater opportunity for traders to attempt to capitalize on the next directional move.
Fed Fuel or Fizzle? Will Earnings Send Stocks to the Moon?
We’re coming out of earnings season right now, and so far, the results have been mixed. There’s been some solid moves on both sides in terms of the market’s reaction following the results, but the trend continues to be that earnings are climbing.
Not only does this help with concerns surrounding valuation in markets, but it helps justify a sustained move to the upside in time. Then of course, there’s the Federal Reserve, which would seemingly like to continue lowering rates if the economic data justifies.
The recent inflation* result showed an uptick in price increases, which makes the next report on March 12 all the more important. If the January report was a one-off event, it could galvanize the Fed to lower rates again this year, which could turn into a tailwind for stock prices.
In this scenario, Direxion’s Daily S&P 500 Bull 3X Shares (Ticker: SPXL) could see a strong bid. This fund seeks daily investment results, before fees and expenses, of 300% of the performance in the S&P 500 Index.*
Below is a daily chart of SPXL as of March 3, 2025.
Source: TradingView.com
Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. For the most recent month-end performance go to Direxion.com/etfs. For standardized performance click here.
Trade War or Trade Score? The Market Braces for Impact
Unfortunately for bulls, lower inflation data is something that cannot be taken for granted, especially with the threat of tariffs looming on the horizon. There is only a temporary reprieve in the tariffs between Canada and Mexico right now, and there will be additional updates on that front come early-March.
Tariffs could lead to higher prices that show up in inflation data down the line. There’s also the major reduction in government spending that must be considered as well. While such measures are likely to help the economy in the long-run, it could lead to some short-term turbulence in markets as that money is removed from economic circulation.
Traders seeking to protect themselves from these potential bearish developments may find a trade with Direxion’s Daily S&P 500 Bear 3X Shares (Ticker: SPXS), which seeks daily investment results, before fees and expenses, of 300% of the inverse (or opposite) of the performance in the S&P 500 Index.
Below is a daily chart of SPXS as of March 3, 2025.
Source: TradingView.com
Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.
The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate. An investor’s shares, when redeemed, may be worth more or less than their original cost; current performance may be lower or higher than the performance quoted. For the most recent month-end performance go to Direxion.com/etfs. For standardized performance click here.
*Definitions and Index Descriptions
An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
Leveraged and Inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk and who actively manage their investments.
The “S&P 500 Index” is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Rafferty Asset Management, LLC (“Rafferty”). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Rafferty. Rafferty’s ETFs are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500® Index.
Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. A Fund is non-diversified and includes risks associated with the Fund’s concentrating its investments in a particular industry, sector, or geography which can increase volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause prices to fluctuate over time.
Leverage Risk – Each Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation or inverse correlation with the Index and may increase the volatility of the Fund.
Daily Index Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with the Index and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day.
Daily Inverse Index Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with the Index and therefore achieve its daily inverse leveraged investment objective. The Bear Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day.
Information Technology Sector Risk — The value of stocks of information technology companies and companies that rely heavily on technology is particularly vulnerable to rapid changes in technology product cycles, rapid product obsolescence, government regulation, and competition, both domestically and internationally, including competition from competitors with lower production costs.
Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Market Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Other Investment Companies (including ETFs Risk), Cash Transaction Risk, Passive Investment and Index Performance Risk and for the Direxion Daily S&P 500® Bear 3X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.
Distributor: ALPS Distributors, Inc.