The SPDR S&P 500 (NYSE:SPY) was edging higher Thursday despite the Federal Reserve reinstating its rate hike campaign, which the market had priced in leading up to the event.
The central bank left open the possibility that further tightening may be needed to bring inflation to a 2% objective, although Fed chair Jerome Powell acknowledged that progress has been made.
Although the SPY was nudging down from its high-of-day, the move higher on Thursday confirmed the ETF's uptrend remains intact.
Experienced traders who wish to play the SPY either bullishly or bearishly may choose to do so through one of two Direxion ETFs. Bullish traders can enter a short-term position in Direxion Daily S&P 500 Bull 3X Shares (NYSE:SPXL) and bearish traders can trade the inverse ETF, Direxion Daily S&P 500 Bear 3X Shares (NYSE:SPXS).
The ETFs: SPXL and SPXS are triple leveraged funds that track the movement of the SPY, seeking a return of 300% or –300% on the return of the benchmark index over a single day.
It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to long-term investments.
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The SPXL Chart: SPXL gapped up 0.88% to start Thursday's trading session before falling to completely close the lower gap. During the afternoon, SPXL was rising from the low-of-day, working to print a hanging man candlestick in the daily chart.
- A hanging man candlestick is often found at the local top of a trend and can indicate a retracement is on the horizon. If that happens, bullish traders want to see the ETF bounce up above $95.41 or a lower low will form to negate the uptrend.
- The eight-day exponential moving average (EMA) has been guiding SPXL higher since June 10. When the ETF drops, to at least print its next higher low, the area is likely to act as support.
- Bearish traders want to see the ETF fall under the eight-day EMA and form a lower low, which could accelerate downside pressure. If that happens, the ETF may find support at the 21-day EMA.
- SPXL has resistance above at $99.21 and at $106.80 and support below at $94.43 and at $87.80.
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