SOXL - Watch Out Below? A Steep Market Correction Could Ruin SOXL Returns
2024-04-07 16:14:07 ET
Summary
- The AI boom in semiconductor equities could easily flip into a period of selling due to high valuations and the potential for unexpected rises in inflation and interest rates.
- The Direxion Daily Semiconductor 3x Bull ETF may soon experience a painful correction or crash, from its ultra-leveraged design.
- Technical momentum in SOXL has reversed in favor of sellers since February, perhaps indicating an exhaustion of buying interest.
It finally looks like the AI boom in investor buying of semiconductor equities is ready to roll over into a stretch of selling. Why? Sure, valuations and pricing have been reaching for ever higher extremes since last summer. My bearish view is an unexpected rise in inflation and interest rates into the summer will blow a hole into the falling-rate rationale supporting the gigantic upmove in Big Tech and semiconductor share prices since October....
Watch Out Below? A Steep Market Correction Could Ruin SOXL Returns