In times of heavy market volatility, large caps are proving their mettle when it comes to leveraging exchange-traded fund (ETF) products from Direxion Investments. These larger cap companies typically have the financial wherewithal to blunt the heavy movement of a market downward given their relative stability in volatile times.
Inflation fears and talks of a forthcoming recession are certainly helping to fuel the recent spate of sell-offs in 2022. Bonds haven’t been immune to the selling either despite their typical use as a hedging asset when the stock market goes awry.
A lot of financial advisors talk about having staying power when it comes to the markets. Staying invested is better rather than sitting on the sidelines with cash — it’s like a prizefighter staying entrenched in a fight despite being down on the score cards because one punch could change the trajectory of a match.
Investors and traders alike can stay in the game with large caps. For the latter, traders can opt to amplify their gains with triple leverage if their bullish notions in the S&P 500 prove correct.
So far, that’s been the case. In particular, the Direxion Daily S&P 500® Bull 3X Shares ETF (SPXL) is standing head and shoulders above the Direxion Daily Mid Cap Bull 3X Shares (MIDU) and the Direxion Daily Small Cap Bull 3X Shares (TNA).
MIDU data by YCharts
Getting Tactical Exposure
Of course, staying in large caps isn’t a miracle elixir when it comes to the markets. While they do provide a formidable combo of capturing upside while limiting the downside, there’s also a place for MIDU and TNA when the market environment warrants their use.
As such, these leveraged ETFs can be utilized for tactical exposure when the markets shift to their advantage. If, for example, markets rally again, small caps can move higher amid the market euphoria in a heavy rally, thus making the case for TNA.
Additionally, mid caps can provide the middle ground for traders who want more upside without the heavier loss potential of small caps. This is where MIDU can serve the purpose of traders.
In any case, there’s a product that can fit a tactical trader’s needs.
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