With a new U.S. president at the helm and a Fed that’s getting mixed signals from the economy, uncertainty abounds. Traders can ease those fears with leveraged and inverse exchange-traded funds (ETFs) from Direxion’s product suite.
As noted in a Reuters article, a chart representing economic and monetary policy uncertainty revealed the elevated levels of both near the end of 2024. With the Fed on a rate-cutting path, that strategy was challenged with sticky inflation amid weaker consumer sentiment.
As is typically the case when a new Commander in Chief takes charge of the world’s largest economy, U.S. president Donald Trump’s victory also brought forth its own set of question marks. The potential for tariffs, given Trump’s stance in the past, stoked thoughts of higher and persistent inflation. At the same time, proposed tax cuts could also spur the economy higher, which could put rate cuts in jeopardy while lightening the load of consumer prices.
All in all, it’s difficult to gauge what exactly the S&P 500 will do with new presidential policy agendas in place.
“Measures of policy uncertainty have spiked since Donald Trump’s election win in November,” Reuters said. “But the data since December remains helpful to the bulk of Fed officials who feel the job market and the economy overall are in healthy shape, with inflation expected to ebb further in coming months.”
ETF Trading Tools to Use
If inflation ebbs and the S&P 500 responds favorably toward the upside, traders who want triple their exposure to the index will want to use the Direxion Daily S&P 500 Bull 3X Shares ETF (SPXL ). However, in the event of further downside amid stubborn inflation, taking the other side, with the Direxion Daily S&P 500 Bear 3X ETF (SPXS ), is the ideal countermove.
Additionally, the tech sector comprises a large portion of the S&P 500. Given this, its performance can sway the movements in the index. This allows traders to capitalize on more concentrated plays in the tech industry. That said, traders will want to look at the Direxion Daily Technology Bull 3X ETF (TECL ) when bullishness abounds. On the other end of the spectrum, they can use the Direxion Daily Technology Bear 3X ETF (TECS ). Both funds provide exposure to 300% of the daily performance of the Technology Select Sector Index, which is provided by S&P Dow Jones Indices and includes domestic companies from the technology sector.
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