Direxion Daily Semiconductor Bull 3X Shares SOXL soared to new heights over 25 months between March 1 and March 8, as anticipated by experts. Following this surge, the ETF, a triple-leveraged fund comprising various semiconductor stocks, embarked on a consolidation phase, experiencing an 18% dip from the peak of $56.99 on March 8.
The recent consolidation led to a dip in SOXL’s relative strength index (RSI) from approximately 75% to a more favorable 56%. With the lowered RSI, SOXL now has the potential to ascend further once the consolidation concludes. The future trajectory hinges on whether key holdings like Nvidia Corporation NVDA and Advanced Micro Devices, Inc AMD continue their positive momentum within the bull cycles.
AMD holds an 8.67% weight in the SOXL fund, closely followed by Broadcom, Inc AVGO at 8.59%. Nvidia stands as the third-largest holding in the ETF, with a weight of 7.54%.
On the analytical front, BofA Securities analyst Vivek Arya reaffirmed a Buy rating on Nvidia stock on Wednesday, raising the price target from $925 to $1,100. Arya’s adjusted estimate showcases a potential 21% upside, signaling room for Nvidia’s stock to make significant gains.
In the realm of trading, there exists a counterpart for each scenario. Traders looking to capitalize on a downward trajectory in the semiconductor sector can consider monitoring the Direxion Daily Semiconductor Bear 3X Shares SOXS. It must be highlighted that Direxion’s leveraged funds cater to short-term trading strategies and are unsuitable for prolonged holding periods.
The SOXL Chart: Observing market movements, when SOXL dipped on Monday and Wednesday, it rebounded from the $45 mark, a behavior also seen on March 5. This consistent rebound indicates robust support at this level, leading to the formation of a triple bottom pattern within the ETF.
- On Wednesday, SOXL displayed signs of forming a hammer candlestick on the daily chart, suggesting a potential bottoming process. Confirmation of this pattern with a higher trade on Thursday could signal a bullish turn, nullifying the recent downtrend.
- A breach above Tuesday’s high-of-day would propel SOXL out of a rising channel pattern it has adhered to since December 14, offering a bullish outlook for the ETF.
- Bearish traders, on the other hand, seek a drop below the $45 threshold to erase the triple bottom pattern, potentially intensifying downside pressure.
- SOXL faces resistance levels at $50 and $55.94, while support lies at $44.97 and $41.60.
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