Direxion Daily Homebuilders & Supplies Bull 3X Shares (NYSE: NAIL) was spiking up almost 7% higher on Friday, in an attempt to reverse course from its most recent downtrend, which began on May 4.
NAIL is a triple leveraged fund that is designed to outperform 52 U.S. companies in the home construction sector that are trading on the Dow Jones. The index includes a variety of companies from home construction firms, interior furnishings to home improvement retailers, building material manufacturers and suppliers.
Some of the more familiar names in the ETF include Home Depot , Inc (NYSE: NYSE:HD), weighted at 3.55%, Lowe’s Companies, Inc (NYSE: LOW), weighted at 3.29% and Builders FirstSource, Inc (NYSE: BLDR), which is weighted at 1.68% within the ETF.
It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to a long-term investment.
Want direct analysis? Find me in the BZ Pro lounge! Click here for a free trial.
The NAIL Chart: NAIL officially fell into a bear cycle at the end of February when the 50-day simple moving average (SMA) crossed below the 200-day SMA, which created a death cross to occur on the ETF’s chart. The ETF has been trading in a fairly consistent downtrend since reaching a new all-time high of $127.84 on Dec. 13, 2021, however, which was caused by a negative sentiment shift in the homebuilding and supply sector.
- NAIL’s most recent lower high in its downtrend was printed on May 10 at $39.85 and the most recent lower low was formed at the $30.01 level on Thursday. If the ETF is about to reverse course into an uptrend, traders and investors can watch for NAIL to print a higher low on its next retracement.
- Technical traders may have anticipated the rise higher would come on Friday because on Wednesday and Thursday, NAIL formed a bullish double bottom pattern near the $30 mark. The ETF has also seen increasing volume over the past few weeks, which indicated interest has been returning.
- Between about April 11 and Thursday, bullish divergence occurred on the NAIL chart, which also indicated the ETF was likely to trade higher. A bullish divergence occurs when a stock or ETF forms a series of lower lows while its relative strength index prints a series of higher lows.
- If NAIL closes the trading day near its high-of-day price, it will print a bullish kicker candlestick, which could indicate higher prices will come again on Monday. If the stock closes the trading session with a long upper wick, it could indicate the next lower high has been formed and the ETF will trade lower on Monday.
- NAIL has resistance above at $39.10 and $46.85 and support below at $28.65 and at the $21.60 level.
See Also: How to Read Candlestick Charts for Beginners
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Read at Benzinga