SPXL 3x S&P 500 ETF: Best Of All Leveraged Longs (NYSEARCA:SPXL)


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This survey of popular exchange-traded funds (“ETFs”) holding derivatives that cause their market price to move two or three times the price movements of their underlying index focuses primarily on the Direction Daily S&P 500 Bull 3x Shares ETF (NYSEARCA:SPXL).

How can leveraged ETFs hope to capitalize on past forecasts?

market prices are is forecast every day by self-protective, disruptive actions by Market Makers (“MMs”) negotiating large-scale block trades for institutional investors who manage their $Billions in equity investment portfolios.

Records of market results after such daily forecasts make their trends visually comprehensible and their opportunities and risks clear in graphic form. The images shown below are the negotiated forecast results, not any hoped-for tools to guess what might happen later. While there are no guarantees about the future, examples at hand are far better than assertion hypotheses without evidence.

In addition, the results follow identical strategy disciplines for all stocks, making forecast expectations directly comparable. In this way, personal preferences can be closely followed.

We begin by comparing earnings prospects and risk positions.

illustration 1

MM Hedging Forecasts

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(Used with permission.)

The expected profits for these securities are the largest profits from the current market close that are worth protecting short positions. Your measurement is on the horizontal green scale.

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The risk dimension consists of actual price declines at their most extreme point while held in the previous pursuit of upside premiums similar to those currently observed. They are measured on the red vertical scale.

Both scales show a percentage change from zero to 25%. Any stock or ETF whose current risk exceeds its expected return is above the dotted diagonal line. High yield issues are in the down and right directions.

Our primary interest is on-site SPXL [9]. A “Market Index” norm of reward-risk trade-offs is offered by SPY [1]. The most appealing (to own) of this one illustration 1 View can be SPXL.

Comparison of characteristics of alternative investment stocks

That illustration 1 map provides a good visual comparison of the two most important aspects of any stock investment in the short term. There are other aspects of the comparison that this card sometimes doesn’t convey well, especially when general market perspectives like SPY’s are involved. Where there are “how likely” questions, other comparison charts such as Figure 2 may be useful.

The yellow highlighting of the table’s cells highlights factors important to security valuations and the security SPXL ranked as the most promising for near capital gains in the column [R]. Pink cell fills indicate insufficient proportions of essential performance requirements in competition, such as [T] Where [F] risk exposure exceeds [E] reward option.

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figure 2

detailed comparative data

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The price ranges implied by the day’s transaction activity are presented in columns [B] and [C]typically around the daily closing price [D]. They produce a measure of risk and reward that we call the Range Index [G]the percentage of the prediction range from B to C that falls between D and C.

Today’s Gs are used for the last 5 years of each stock’s daily forecast history [M] count and average beforehand [L] Experiences. Less than 20 of Gs or a shorter history of Ms is considered statistically insufficient.

[H] indicates what percentage of L positions were closed profitably, either at peak prices or at the market close above the day following the predicted cost of entry for the closing price. The net realization of all Ls is shown in FIG [I].

[I] Fractions are weighted with H and 100-H in [O, P, & Q] appropriately conditioned by [J] provide investment ranking [R] in CAGR units of basis points per day.

The more than 3,000 securities for which price range forecasts are available offer an additional market perspective. They currently suggest that the market recovery, while underway, is far from broadly attractive.

On the other hand, the R-column values ​​for SPXL and the top 20 forecast population support the main candidate’s competitiveness.

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Current trends from Price area Forecasts for SPXL

figure 3

daily forecast trends

blockdesk.com

(Used with permission.)

This is not a typical “technical analysis chart” of simple historical (only) observations. Instead, it shows the Daily updated market maker price range forecasts implied by real-time live capital commitments.

Its communicative value is presented here through visual comparisons of the proportions of upside and downside price change expectations at each forecast date. Expectations of the market making community influenced by the actions of an interested and involved institutional investment participant with a large US Dollar.

These forecasts are typically resolved to time horizons of less than half a year and often to two months or less. This states that out of the 21 previous forecasts like today’s, about 19 out of 20 were profitable, completing in 36 market days (7+ weeks) profitably with average gains of +22%, which is a CAGR rate of 306%. No promises, just fun with the story.

Conclusion

Comparing the performance of short-term market maker forecasts for Direxion Daily S&P 500 Bull 3x Shares ETF with similar projections for other leveraged long ETF securities that investors are following, makes it clear that this ETF can be an attractive investment choice for investors pursuing short-term capital gains strategies.



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