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Wall Street Hits Record High: Leveraged ETFs to Play

Sanghamitra Saha

U.S. stocks have been rallying since the news of the phase-one U.S.-China trade deal emerged in October. The rally was further spurred on Nov 12  by the announcement of President Trump that the U.S. and Chinese negotiators were "close" to a "phase one" trade deal.The S&P 500 crossed the 3,100 level and the Nasdaq steered past the 8,500 mark.

Apart from hopes on the trade front, a decent earnings season, better-than-expected U.S. GDP growth rate for the third quarter and global easy money policies are fueling the equity rally.  Tensions related to global growth have somewhat ebbed lately. Also, oil prices remained more-or-les stable in the past month along with the broader commodity market (read: Risk-On Sentiments Are Back: ETFs to Play).

The U.S. economy grew an annualized 1.9% in the third quarter of 2019, surpassing expectations of 1.6%. Continued consumer spending as well as government expenditures contributed as well. Jobs data for the month of October was robust (read: Sector ETFs to Win After Robust October Jobs Data).

Oil and stock benchmarks for the United States, Europe and emerging markets all are on their way to gain at least 10% in the same year for the first time since 2009. Currencies sensitive to global growth and trade that include the South Korean won and Australian dollar have seen decent trading too.

Leveraged ETFs in Focus

Thanks to this optimism, investors can play the below-mentioned leveraged ETFs in the near term. Leveraged funds provide multiple exposure (i.e. 2x or 3x) to the daily performance of the underlying index. These are likely to stay strong as long as there isn’t any fallout in the U.S.-China trade talks (see all Leveraged Equity ETFs here).

S&P 500

Ultra S&P500 ETF SSO — Up 0.4% on Nov 12

The ProShares Ultra S&P500 seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the S&P 500. The fund charges 90 bps in fees.

UltraPro S&P 500 ETF UPRO — Up 0.5%

The ProShares UltraPro S&P500 seeks daily investment results, before fees and expenses, that correspond to triple the daily performance of the S&P 500 Index. The fund charges 92 bps in fees.

Direxion Daily S&P 500 Bull 3x Shares ETF SPXL — Up 0.6%

The underlying Direxion Daily S&P 500 Bull 3x Shares seeks daily investment results, before fees and expenses, of 300% of the price performance of the S&P 500 Index. The expense ratio of 1.02%.

Nasdaq 100

ProShares UltraPro QQQ TQQQ — Up 0.82%

The underlying ProShares UltraPro QQQ seeks daily investment results, before fees and expenses, that correspond to triple the daily performance of the NASDAQ-100 Index. The fund charges 95 bps in fees.

ProShares Ultra QQQ QLD — Up 0.52%

The underlying ProShares Ultra QQQ seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of the NASDAQ-100 Index. The fund charges 95 bps in fees.

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ProShares UltraPro S&P500 (UPRO): ETF Research Reports
 
ProShares UltraPro QQQ (TQQQ): ETF Research Reports
 
Direxion Daily S&P 500 Bull 3X Shares (SPXL): ETF Research Reports
 
ProShares Ultra S&P500 (SSO): ETF Research Reports
 
ProShares Ultra QQQ (QLD): ETF Research Reports
 
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