BREAKING: Debt-Ceiling Optimism Wanes With Futures Ahead
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.
Investing in the funds involves a high degree of risk. Unlike traditional ETFs, or even other leveraged and/or inverse ETFs, these leveraged and/or inverse single-stock ETFs track the price of a single stock rather than an index, eliminating the benefits of diversification. 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 stock’s performance over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments. The Funds will lose money if the underlying stock’s performance is flat, and it is possible that the Bull Fund will lose money even if the underlying stock’s performance increases, and the Bear Fund will lose money even if the underlying stock’s performance decreases, over a period longer than a single day. An investor could lose the full principal value of his or her investment in a single day. The Funds do not invest directly in AMZN. Direxion Single Stock Daily Leveraged & Inverse ETFs allow sophisticated traders to seek magnified or inverse exposure to popular individual securities.
Will Amazon Deliver for the Bulls or Bears?
For years, Amazon.com, Inc. (Ticker: AMZN) was one of the top-performers in the stock market. But share prices peaked back in July 2021, several months before the overall market did. A monumental correction followed that erased over 50% of the stock’s value, but even today, the company is worth around $1.07 trillion. A nice rally for AMZN began at the beginning of this year. Was this the end of the bear trend and the beginning of a new bull market for traders? Or will short sellers start to reemerge again here shortly?
Prime Time to Buy the Dip?
Amazon is keeping up with the times and not sitting by idly while its big-tech competitors invest heavily into the realm of artificial intelligence (AI). The company started rolling out its own AI platform called Bedrock for its Amazon Web Service (AWS) customers back in April.
Bedrock allows AWS users to customize the AI’s language model, also known as Titan, to better suit customer needs. In time, this could further improve an already efficient and productive organization in Amazon.
Amazon’s advertising business is also growing notably. It generated over 8% of its sales last quarter, and saw 23% year-over-year growth in this space. This is especially remarkable because there’s been a major slowdown in ad-spend from most companies amid economic uncertainty, but not on Amazon, apparently.
The company is also seeing nice growth in its grocery business due to its partnership with Whole Foods, and the expansion of its own online Amazon Fresh marketplace. More and more consumers are switching to online grocery ordering even in the aftermath of Covid.
Traders that favor the bullish outlook for Amazon may consider Direxion’s Daily AMZN Bull 1.5X Shares (Ticker: AMZU), which seeks daily investment results, before fees and expenses, of 150% of the performance of the common shares of Amazon.com, Inc.
Below is a daily chart of AMZN as of April 20, 2023.
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.
What if the Bears Return?
Amazon is still grappling with a shrinkage in profit margins with respect to its e-commerce and cloud computing businesses. The question is whether these were just temporary due to the macroeconomic environment in the past couple years, or if it was the start of a more structural shift in the company’s outlook. Additionally, inflation has presented a major challenge for Amazon’s Web Services customers, which have responded by switching to less-expensive service tiers.
Those that favor the bear outlook for Amazon may consider Direxion’s Daily AMZN Bear 1X Shares (Ticker: AMZD), which seeks daily investment results, before fees and expenses, of the inverse (or opposite) of the performance of the common shares of Amazon.com, Inc.
Broader Tech Opportunities
Traders looking for alternative tech sector exposure, plus more leverage may find opportunities in Direxion’s Daily Semiconductor Bull 3X Shares (Ticker: SOXL) or the Daily Semiconductor Bear 3X Shares (Ticker: SOXS). Each Fund seeks to track daily investment results, before fees and expenses, of 300% or -300% , respectively, of the performance of the ICE Semiconductor Index*.
Traders opting to place bets on the artificial intelligence specifically may like the Direxion Daily Robotics, Artificial Intelligence & Automation Index Bull 2X Shares (Ticker: UBOT), which seeks to provide investment results, before fees and expenses, of 200% of the daily performance of the Indxx Global Robotics and Artificial Intelligence Thematic Index*.
There’s even a Direxion Daily Cloud Computing Bull 2X Shares (Ticker: CLDL), which seeks to track investment results, before fees and expenses, of 200% of the performance of the Indxx USA Cloud Computing Index*.
Index information and disclosure:
Neither Rafferty nor the Direxion Daily Semiconductor Bull 3X Shares and the Direxion Daily Semiconductor Bear 3X Shares (the “Financial Products”) are sponsored, endorsed, sold or promoted by Interactive Data Pricing and Reference Data, LLC or its affiliates (“Vendor”). Vendor makes no representation or warranty regarding the advisability of investing in securities generally, in the Financial Products particularly, or the ability of the ICE Semiconductor Index to track general financial market performance. VENDOR MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE ICE INDEX OR ANY DATA INCLUDED THEREIN. IN NO EVENT SHALL VENDOR HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
The Cloud Computing Index is provided by Indxx, LLC (the “Index Provider”) and includes domestic companies that deliver cloud computing infrastructure, platforms, or services. The companies included in the Index are involved in the delivery of computing services – servers, storage, databases, networking, software, analytics, and more, over the internet, which is often referred to as the “Cloud.” The Index Provider has defined cloud computing to include three themes: Infrastructure as a service; Platform as a service; and Software as a service.
ICE Semiconductor Index (ICESEMI) is a rules-based, modified float-adjusted market capitalization-weighted index that tracks the performance of the thirty largest U.S. listed semiconductor companies.
The Indxx Global Robotics and Artificial Intelligence Thematic Index (IBOTZNT) is designed to provide exposure to exchange-listed companies in developed markets that are expected to benefit from the adoption and utilization of robotics and/or artificial intelligence, including companies involved in developing industrial robots and production systems, automated inventory management, unmanned vehicles, voice/image/text recognition, and medical robots or robotic instruments, as defined by the index provider, Indxx. Companies must have a minimum market capitalization of $100 million and a minimum average daily turnover for the last 6 months greater than, or equal to, $2 million in order to be eligible for inclusion in the Index.
One cannot directly invest in an index.
The Funds have derived all disclosures contained in this document regarding Amazon.com, Inc. from publicly available documents. In connection with the offering of each Fund’s securities, neither the Funds, the Trust, nor the Adviser or any of its respective affiliates has participated in the preparation of such documents. Neither the Funds, the Trust nor the Adviser or any of its respective affiliates makes any representation that such publicly available documents or any other publicly available information regarding Amazon.com, Inc. is accurate or complete. Furthermore, the Funds cannot give any assurance that all events occurring prior to the date hereof (including events that would affect the accuracy or completeness of the publicly available documents described above) that would affect the trading price of Amazon.com, Inc. have been publicly disclosed. Subsequent disclosure of any such events or the disclosure of or failure to disclose material future events concerning Amazon.com, Inc. could affect the value of a Fund’s investments with respect to Amazon.com, Inc. and therefore the value of the Funds.
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 www.direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.
Single Stock Daily Leveraged & 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 individual security over periods longer than one day. They are not suitable for all investors and should be utilized only by investors who understand leverage risk and who actively manage their investments.
Consumer Discretionary Sector Risk — Because companies in the consumer discretionary sector manufacture products and provide discretionary services directly to the consumer, the success of these companies is tied closely to the performance of the overall domestic and international economy, including the functioning of the global supply chain, interest rates, competition and consumer confidence.
Amazon.com, Inc. Investing Risk — Amazon.com, Inc. faces risks associated with intense competition across different industries, including physical, e-commerce omni channel retail, e-commerce services, web and infrastructure computing services, electronic devices, digital content, advertising, grocery, and transportation and logistics services; the expansion into new products, services, technologies and geographic regions; its international activities; the variability in the demand for its products and services; intellectual property rights; risks relating to successfully optimizing and operating its fulfilment network and data centers; data loss or other security breaches; maintaining key senior management personnel and the ability to hire and retain highly skilled and other key personnel; maintaining good supplier relationships, including content and technology licensors; the success of acquisitions or joint ventures or other investments; its rapidly evolving and expanding business model; and legal, regulatory and litigation issues.
Direxion Shares Risks – An investment in the Fund involves risk, including the possible loss of principal. The Fund is non-diversified and includes risks associated with the Fund concentrating its investments in a particular security, industry, sector, or geographic region which can result in increased volatility. A Fund’s investments in derivatives such as futures contracts and swaps may pose risks in addition to, and greater than, those associated with directly investing in securities or other investments, including imperfect correlations with underlying investments or the Fund’s other portfolio holdings, higher price volatility and lack of availability. As a result, the value of an investment in a Fund may change quickly and without warning. Risks of the Fund include Effects of Compounding and Market Volatility Risk, Leverage Risk, Derivatives Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Daily Correlation Risk, Amazon.com, Inc. Investing Risk, Market Risk, Industry Concentration Risk, Indirect Investment Risk, Trading Halt Risk, Cash Transaction Risk, Tax Risk, and risks specific to the consumer discretionary sector. Additional risks include, for the Direxion Daily AMZN Bear 1X Shares, risks related to Shorting. Please see the summary and full prospectuses for a more complete description of these and other risks of the Fund.
Distributor: Foreside Fund Services, LLC.
Retirement planning can help you get more out of your damaged nest egg. (© Dave Cutler)
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Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the stocks they discuss. The information and content are subject to change without notice.
*Real-time prices by Nasdaq Last Sale. Realtime quote and/or trade prices are not sourced from all markets.
Ownership data provided by Refinitiv and Estimates data provided by FactSet.
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