SOXL Soars to 25-Month Highs: Direxion Daily Semiconductor Bull 3X Shares (SOXL) reached new heights between March 1 and March 8, a surge that had been anticipated by industry experts. After hitting these new highs, the ETF, a triple-leveraged fund holding various semiconductor stocks, underwent a consolidation phase, retracting approximately 18% from its peak of $56.99 on March 8.
Recent consolidation has caused SOXL’s relative strength index (RSI) to drop from around 75% to a more moderate 56%. This dip in RSI suggests potential for further growth post-consolidation, contingent on the bullish cycles of top SOXL holdings such as Nvidia Corporation (NVDA) and Advanced Micro Devices, Inc (AMD).
AMD constitutes 8.67% of SOXL’s portfolio, with Broadcom, Inc (AVGO) at 8.59% and Nvidia as the third largest holding with 7.54% weighting.
In a positive development, BofA Securities analyst Vivek Arya raised his price target for Nvidia stock from $925 to $1,100, suggesting a 21% upside potential and signaling confidence in Nvidia’s growth trajectory.
For those bearish on the semiconductor sector or seeking to capitalize on a market downturn, tracking the Direxion Daily Semiconductor Bear 3X Shares (SOXS) might be advisable. However, it is essential to note that Direxion’s leveraged funds are best suited for short-term trading endeavors and not prolonged investments.
SOXL Performance Trends: Recent trading patterns reveal SOXL bouncing back from the $45 mark on multiple occasions, indicating strong support at this level and hinting at a triple bottom formation. Additional analysis of recent candlestick patterns on the daily chart suggest a potential upward trajectory for the ETF.
- On Wednesday, SOXL showed signs of forming a hammer candlestick, potentially indicating a local bottom. Confirmation of this pattern could drive the ETF’s price higher, possibly surpassing previous highs and reversing recent downward trends.
- A break above Tuesday’s high could also signal a bullish breakout from a rising channel pattern that SOXL has been following since mid-December.
- Bearish traders would be looking for SOXL to fall below the $45 mark, disrupting the triple bottom pattern and intensifying selling pressure.
- Key resistance levels for SOXL are at $50 and $55.94, while support levels lie at $44.97 and $41.60.
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