SPXS ETF

The Direxion Daily S&P 500 Bear 3X Shares ETF seeks to deliver 300% of the inverse return of the S&P 500 index. Near-term peaks and bottoms in the S&P 500 dividend yield have marked major market reversal points in the past. The dividend yield on the SPDR S&P 500 ETF Trust stands at just 1.20%, marginally above all-time lows.

Timing is crucial when trading leveraged ETFs like SPXS, these funds are not meant for long-term investment. Current economic indicators suggest downward pressure on stocks, making SPXS a speculative bearish wager. Market conditions, high valuations, and political uncertainty indicate potential catalysts for a market correction.

When stock market indexes have sudden declines, traders can be caught off guard. However, investors can protect themselves and potentially make gains by using inverse ETFs, specifically two ETFs from Direxion Investments.

As investors seek out safe options in unstable markets, bear market funds are becoming more popular as a diversified asset class specifically built to weather highly volatile markets. While these funds can be attractive during economic downturns because they have the potential to generate returns despite market fluctuations, they also come with significant risks and volatility.

Increased optimism in rate cuts may be slowly dissipating as the economy continues to run hot and inflation remains sticky. That opens opportunities in bearish exchange-traded funds (ETFs) as investors continue hoping for a rate cut that may not come as quickly as they had hoped for.

Direxion Daily S&P 500 Bear 3X Shares ETF is a popular instrument for shorting the market, but its daily -3X leverage factor causes drift. The reason why leveraged ETFs drift. Biotechnology, semiconductors, and precious metals ETFs show the largest drifts.

Direxion Daily S&P 500® Bear 3X Shares ETF is a popular instrument for hedging a stock portfolio and shorting the market. Like all leveraged exchange-traded funds, the SPXS ETF is subject to volatility drift, explained hereafter. The drift is positive now, but the historical average is negative while historical drift is close to neutral for ProShares UltraShort S&P500 ETF.

Year to date, the Russell 2000's scant 1% gain is dwarfed by the S&P 500's 18% gain. But that could be changing.

Precious metals and semiconductors leveraged ETFs show the largest drifts now. SPXS has a positive drift on one and 12 trailing months. SPXS's drift history and risks in current market conditions are analyzed.