Benzinga - by Melanie Schaffer, Benzinga Editor.
Direxion Daily Semiconductor Bull 3X Shares (ARCA: SOXL) was surging over 7% on Thursday, looking to print a higher high to confirm its uptrend remains intact.
The semiconductor sector has been experiencing a bull cycle, with NVIDIA Corporation (NASDAQ: NVDA) flying in blue skies amid the company making a consistent series of new all-time highs in response to beating quarterly earnings estimates again. Advanced Micro Devices, Inc (NASDAQ: AMD) was pushing higher into blue skies, propelled by positive sentiment in the sector.
SOXL is a triple-leveraged fund that consists of a variety of stocks in the semiconductor sector. AMD makes up 8.67% of the fund, while Nvidia is weighted at 7.54%.
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On Thursday, the S&P 500 looked to be attempting to break up from a bull flag pattern, indicating the stock market could be heading for another all-time high after the Federal Reserve’s preferred inflation gauge met expectations. Tech stocks, including chipmaker stocks, have enjoyed bullish price action recently, matching the positive movements seen in the general markets.
Traders who are bearish on the semiconductor sector or who are looking to trade an eventual pullback can track the Direxion Daily Semiconductor Bear 3X Shares (NYSE: SOXS).
It should be noted that Direxion’s leveraged funds are designed for short-term traders and shouldn’t be held for a long period of time.
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The SOXL Chart: SOXL has been trading in a fairly consistent uptrend since Oct. 31, when the stock formed a bullish double-bottom pattern at the $14.09 mark. Since Dec. 14, SOXL’s uptrend has been taking place within a rising channel pattern, which is considered to be bullish until a stock or ETF breaks down from the lower ascending trend line of the formation.
- Although SOXL’s price has been making higher highs and higher lows, the ETF’s relative strength index (RSI) has been making a series of lower lows. This has caused bearish divergence to occur on SOXL’s chart, which indicates the ETF is losing momentum.
- Bullish traders want to see SOXL close Thursday’s trading session above the Feb. 23 high of $42.68, which will cause the higher high to be confirmed, indicating the uptrend remains intact. Bearish traders want to see SOXL close under that level, which could cause a bullish double-top pattern to form, indicating a retracement is on the horizon.
- SOXL has resistance above at $44.97 and at the psychologically important $50 mark. The ETF has support below at $41.60 and at $39.53.