Bullish On Semiconductor Stocks? Trading Stratagies For This 3X Leveraged ETF (SOXL)

Zinger Key Points
  • SOXL is a triple levered ETF that tracks semiconductor stocks to the upside.
  • The ETF is trading in a strong uptrend, attempting to regain the 200-day SMA as support.

Direxion Daily Semiconductor Bull 3X Shares SOXL was trading down Friday, consolidating a recent rise, which saw the ETF surge almost 70% since Dec. 28.

The semiconductor sector suffered a steep most of last year, which caused SOXL to plummet almost 90% in 2022.

SOXL’s recent reversal — paired with a solid and confirmed uptrend — could provide a solid trade for traders with a high risk-reward appetite.

See Also: Billionaire Blows - Ackman Kicks Seventh Richest Man While He's Down, Calling Adani 'Fraud' Report 'Credible'

SOXL is a triple-leveraged fund that offers 3x daily leverage to bullish movements across a variety of stocks in the semiconductor sector.

The ETF tracks a number of semiconductor companies through its holdings. Popular companies such as Advanced Micro Devices, Inc AMD make up 5.8% of the fund and NVIDIA Corporation NVDA is weighted at 7.71%.

Tech stocks, including chipmakers, have enjoyed bullish price action recently, in tandem with positive movements in the general markets. The S&P 500 and the Nasdaq recently regained the 200-day simple moving average, suggesting the stock market could be headed higher, possibly bringing an end to the bear market.

It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to long-term investments by experienced traders. Leveraged ETFs should never be used by an investor with a buy-and-hold strategy or those who have low-risk appetites.

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

Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.

The SOXL Chart: SOXL opened slightly lower on Friday and was trading in an inside bar, with all the price action taking place within Thursday’s trading range. The inside bar indiates the ETF is in a period of consolidation.

  • SOXL reversed course into an uptrend on Dec. 28 and has made a consistent series of higher highs and higher lows since that date. The ETF’s most recent higher low was formed on Wednesday and $13.33 and the most recent confirmed higher high was printed at the $14.91 mark on Monday.
  • If SOXL breaks up from Thursday’s mother bar later on Friday or on Tuesday, the uptrend will remain intact and the ETF will regain the 200-day simple moving average as support. If that happens, SOXL could be in for a larger reversal to the upside.
  • SOXL has resistance above at $16 and $17.66 and support below at $14.09 and $12.13.
Market News and Data brought to you by Benzinga APIs
Posted In: Long IdeasNewsShort IdeasTechnicalsTop StoriesTrading IdeasETFssemiconductors
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!