Sign InSummary
As of June 27th, 2023, the Direxion Daily Semiconductor Bull 3X Shares (SOXL) ETF closed at $24.37, up 10.32% from the previous day, reflecting its robust performance and strong market sentiment towards the semiconductor sector amid increased US-China competition, with an attractive PE ratio indicating potential future earnings growth, making it a Buy for growth-focused investors.
Fundamental Analysis
Direxion Daily Semiconductor Bull 3X Shares (SOXL) is a leveraged exchange-traded fund (ETF) focused on the semiconductor sector. As of June 27, 2023, the fund closed at $24.37, a 10.32% increase from the previous day.
The fund demonstrated robust performance over the year. The year-to-high and year-to-low prices are $26.79 and $6.21, respectively. These numbers show a significant appreciation in market value, making this ETF attractive for growth-focused investors. Despite experiencing considerable volatility, driven largely by the cyclical nature of the semiconductor market, the upward trend shows strong market sentiment towards the sector.
The fundamentals of this fund are reflected in the earnings per share (EPS) and the price/earnings (PE) ratio. The fund's EPS is at $0.93, and the PE ratio stands at 26.32. The relatively high PE ratio for the fund indicates anticipation of future earnings growth and a willingness among investors to pay a premium for that potential.
Strong momentum is noted in the semiconductor sector, especially given the intensified competition between US and China. This battle for technological supremacy has fueled investments in the sector, driving the performance of SOXL upwards.
Technical Analysis
Soxl's Relative Strength Index (RSI), a momentum oscillator that measures the speed and change of price movements, stands at 60. An RSI above 50 typically indicates that a stock is in a bullish phase. The moving averages for the fund also suggest an upward trend. The 50-day moving average stands at $18.33, and the more extended 200-day moving average is $14.13, both well below the last close price.
The Moving Average Convergence Divergence (MACD), another technical indicator utilized to identify potential buying and selling opportunities, shows a value of 2.72. A positive MACD indicates that the short-term average is pulling away from the long-term average, supporting a bullish signal.
The average volume of the fund is approximately 65.03 million, while the volume on June 27, 2023, was somewhat lower, at about 52.74 million. High trading volume often predicts price volatility due to increased interest and trader involvement.
Outlook and Recommendation
Predicting the price for the next trading day and upcoming week requires keen observations of the market direction and investor sentiment, considering both the fundamental factors such as sector health and competition climate, combined with technical indicators. Considering the momentum in the sector and positive technical indicators, it can be predicted that the SOXL may continue its upward trajectory in the short-term, barring any significant market-borne disruptions or adversarial news.
Given the strong performance and underlying momentum in the semiconductor sector, the analyst views SOXL as a Buy. However, investors should be mindful of the inherent risks in leveraged ETFs and the sector's volatility. Therefore, it is crucial that investors routinely monitor their positions and market conditions. If circumstances change, reassessing the hold, sell or buy position may be warranted.
