UWM - TNA: The Trade Won't Be Small When It Comes
2024-06-03 09:34:04 ET
Summary
- Small caps may outperform large caps in the next bull trade, making the Direxion Daily Small Cap Bull 3X Shares ETF a potential option for exposure.
- TNA achieves 3x daily leverage through swaps, but its performance is highly influenced by volatility.
- TNA is a trading vehicle with the potential for big returns, but it comes with higher risk due to small-cap exposure and leverage.
I've argued for some time that "small-caps hold the key" to what happens next to markets. The broad Russell 2000 Index is still trading below its 2021 highs in nominal terms, and performance after inflation since then is far, far worse. Much of this is because of higher rates given lingering concerns over so-called "zombie companies" that operate on high leverage with thin margins, which may not be able to survive higher for longer rates. Now to be clear, I believe the time nears where small-caps likely do outperform large-caps, but that can happen by being down less in a bear market, as was the case from 2000-2002. In the event that small-caps outperform to the upside and are the next bull trade, then one way to boost your exposure is through the Direxion Daily Small Cap Bull 3X Shares ETF ( TNA )....
TNA: The Trade Won't Be Small When It Comes