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Best Leveraged ETF Areas of Last Week

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Wall Street was at the record high lately with key large-cap indexes like the S&P 500, the Dow Jones and the Nasdaq at the all-time high levels. The small-cap Russell 2000 index too notched that high last week. Upbeat corporate earnings – both large and small caps, stronger-than-expected jobs data and Pfizer pill study aided the markets last week.

Meanwhile, the Fed said that it will gradually slow the pace of those purchases by about $15 billion per month, as part of a plan to bring its so-called quantitative easing program to a total stop by the middle of next year. The taper will start “later this month” and will continue at the $15 billion clip through December, although the change of the pace can happen should the need be (read: Fed to Start QE Taper: Is It Time for Cyclical Sector ETFs?).

Against this backdrop, below we highlight a few leveraged ETF areas that gained handsomely in the past week.

Semiconductors              

Semiconductor Bull 3X Direxion (SOXL - Free Report) – Up 27.8%

Ultra Semiconductors ETF (USD - Free Report) – Up 22.0%

Semiconductor stocks are in the pink now. Last week had produced a host of chip stocks jumping to all-time highs on earnings strength. In any case, the demand scenario in the chip industry is excessively strong.  

Retail    

Retail Bull 3X Direxion (RETL - Free Report) – Up 25.1%

Consumer Discretionary Bull 3X Direxion (WANT - Free Report) – Up 15.8%

As we have stepped into the holiday season, retail stocks are flying high. Several retail stores started offering Black Friday deals with tech deals catching eyes.

Healthcare

Pharmaceutical & Medical Bull 3X Direxion (PILL - Free Report) – Up 25.0%

S&P Biotech Bull 3X Direxion (LABU - Free Report) – Up 15.5%

Pfizer Inc. said its Covid-19 pill cut hospitalizations and deaths in high-risk patients by 89%. The shares surged 10.9% on Nov 5. Last month, Merck & Co. and partner Ridgeback Biotherapeutics LP submitted their experimental pill to regulators as a study revealed that it lowered the risk of getting seriously ill or dying by half in patients with mild-to-moderate Covid-19. Such flow of news has every reason to boost the pharma and biotech funds.

Small-Caps

Ultrapro Russell 2000 ETF (URTY - Free Report) – Up 18.9%

Smallcap Bull 3X Direxion (TNA - Free Report) – Up 18.8%

Small-cap stocks staged a great performance to start November. The cohort has underperformed its bigger peers like the S&P 500 and the Nasdaq in the past six-month period. But things are taking a turn for the better for the pint-sized stocks. The small-cap benchmark Russell 2000 rose to close at an all-time high on Nov 2 (read: 5 Reasons to Bet on Small-Cap ETFs).

Holiday season related sales, upbeat earnings and cheaper valuation augur well for the pint-sized stocks. Moreover, the Fed’s imminent QE tapering is likely to boost the greenback. Since the small-caps are more domestically-focused and do not have much foreign exposure, these are less likely to suffer amid a rising dollar.  

Transportation 

Transportation Bull 3X Direxion (TPOR - Free Report) – Up 17.3%

As economic reopening is speeding up with a massive vaccine drive and chances of the launch of more antiviral treatments, the risk-on sectors are gaining momentum. Sectors that are highly related to economic reopening benefited. Moreover, with the holiday season approaching, transportation stocks have every reason to cheer as even online deliveries will need the assistance of faster and efficient transportation.