The S&P 500 is up 12% year to date and it could keep on climbing if analyst projections are correct. In turn, that could further boost the Direxion Daily S&P 500 Bull 3X Shares ETF (SPXL ).
Many global investment firms and banks are readjusting their S&P 500 forecasts, notably higher than initially anticipated. Morgan Stanley, for example, sees the index reaching 5,400, with BMO being the top bull, with a forecast of 5,600 in the next year.
“Our 2024 and 2025 earnings growth forecasts (8% and 13%, respectively) assume healthy, mid-single-digit top-line growth in addition to margin expansion in both years as positive operating leverage resumes (particularly in 2025),” noted Morgan Stanley’s Mike Wilson, per a Yahoo Finance report.
Of course, a lot of projection analysis will fall on what the Fed does with monetary policy. Because markets these days move as the Fed moves, it can make for constant fluctuations. Thus, flexibility can be an investor’s best tool in the current market environment.
“Markets appear to have moved from a ‘soft landing’ outcome in January to a ‘no landing’ in March and now back towards a ‘softer landing,’” Wilson wrote. "Markets even wrestled briefly with a slower growth/higher inflation outcome in April … Bottom line, markets are fickle and will trade the data as it’s released, particularly when the outcomes are so uncertain."
With bullish pressure for the S&P 500 rising, it’s an opportune time to get ahead of a potential move higher with SPXL. It offers 300% exposure to the index, giving traders the ability maximize profit potential should analyst projections be correct. Because of this leverage, the fund is up well over 30% for the year. And more gains could be on the way, especially when rate cuts officially take place.
'Inherently Volatile and Profitable'
One of the certainties in the market is that volatility will happen. Thankfully, volatility can become a trader’s best friend, clearing the pathway for opportunities to profit from indexes whenever they go up or down.
In the case of the S&P 500, market experts are forecasting more volatility, but pairing it with more profitability. In a time when companies are still churning a profit in high inflation, this bodes well for the markets moving forward and even more so when the Fed loosens monetary policy.
“The markets are inherently volatile and also inherently profitable,” David John Marotta, president of Marotta Wealth Management, wrote in Forbes. “We can measure when the S&P 500 Price Index sets a new high, but there aren’t any new lows. The markets have continued to trend upward for hundreds of years.”
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