Somebody forgot to tell the S&P 500 that there’s still a pandemic going on. The index continues to reach higher heights, which allows exchange-traded fund (ETF) traders to capitalize on the movements with leveraged funds.
A CNBC report noted that “the S&P 500 rose to an all-time high on Tuesday, capping off its incredible recovery from the coronavirus-induced sell-off that knocked it off its previous record back in February.”
“The broader market index climbed 0.2% to 3,389.78, a record close. It also notched an intraday all-time high, reaching 3,395.06 earlier in the day,” the report added. “The S&P 500′s move into record territory came after the index flirted with its all-time closing high for more than a week. It also confirms the start of a new bull market.”
“There has been a lot of good news seemingly validating” this move higher, said Andrew Slimmon, managing director at Morgan Stanley Investment Management. Slimmon noted the economic data has been strong recently and corporate earnings have topped analyst expectations.
“But I would argue the market here is very vulnerable to some type of bad news … You look at the type of stocks that have worked, and they’re the higher-risk, higher beta plays,” Slimmon said.
Trading Movements in the S&P 500
As the markets continue to flux with the uncertainty of the coronavirus, investors can utilize trading options for the S&P 500 that go in either direction, depending on your own confirmation bias. For bullishness, there’s the Direxion Daily S&P 500® Bull 3X Shares ETF (NYSEArca: SPXL)
SPXL daily investment results equating to 300% of the daily performance of the S&P 500® Index. The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in financial instruments, such as swap agreements, and securities of the index, ETFs) that track the index and other financial instruments that provide daily leveraged exposure to the index or ETFs that track the index.
The coronavirus could continue to put a bearish spin on major indexes like the S&P 500. As such, traders can look to the Direxion Daily S&P 500 Bear 3X ETF (NYSEArca: SPXS) for a leveraged inverse play.
SPXS seeks daily investment results equal to 300 percent of the inverse of the daily performance of the S&P 500 Index. The fund, under normal circumstances, invests in swap agreements, futures contracts, short positions or other financial instruments that, in combination, provide inverse (opposite) or short leveraged exposure to the index equal to at least 80 percent of the fund’s net assets (plus borrowing for investment purposes).
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