Direxion Daily Select Large Caps & FANGs Bull 2X Shares (NYSE: FNGG) popped almost 5% after the market opened Friday, but a move higher was hampered by the general market, which may be in need of consolidation because the S&P 500 has soared 5% over the last three trading days.
Many of the large cap stocks held in the ETF have traded significantly higher over the last few weeks, soaring up from their June 16 lows. FNGG has followed suit, surging 37% from the June 16 low of $4.01 to trade at about $5.60 on Friday.
FNGG is a double leveraged fund that is designed to outperform a number of highly traded growth stocks. The ETF tracks stocks in the technology, information technology, communication services and consumer discretionary sectors.
FNGG’s largest four holdings are Roblox Corporation (NYSE: RBLX), weighted at 6.11%; Microsoft Corporation (NASDAQ: NASDAQ:MSFT), weighted at 5.99%; Alphabet (NASDAQ:GOOGL), Inc Class A (NASDAQ: GOOGL), weighted at 5.82%; and Lucid Group, Inc (NASDAQ: LCID), weighted at 5.74%.
The ETF also holds Apple, Inc (NASDAQ: NASDAQ:AAPL), Meta Platforms, Inc (NASDAQ: META) and Netflix, Inc (NASDAQ: NASDAQ:NFLX).
It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to a long-term investment by experienced traders. Leveraged ETFs should never be used by an investor with a buy and hold strategy or those who have low risk appetites.
FNGG offers returns of 200% compared to its benchmark index for a single day only and is not meant to be held for longer than that.
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The FNGG Chart: FNGG has been trading in a fairly consistent uptrend within two parallel lines, which has settled the ETF into a rising channel pattern on the daily chart. A rising channel pattern is considered to be bullish until a stock or ETF drops through the lower ascending trendline of the pattern.
- On Friday, FNGG attempted to break up through the median line of the channel but failed because most of its top holdings dropped to trade mostly flat to their opening prices.
- The ETF was having success holding above the eight-day and 21-day exponential moving averages (EMAs), however, which is bullish.
- If FNGG closes the trading day under the $5.70 level or flat, the ETF will print a shooting star or gravestone doji candlestick, respectively, which could indicate lower prices will come on Monday. If that occurs, traders can watch for FNGG to print a bullish reversal candlestick, such as a doji or hammer candlestick, above the lower trendline of the channel to indicate a bounce is in the cards.
- If FNGG rises up higher over the coming days to reach the upper ascending trendline of the channel, bearish traders can watch for the ETF to print a bearish reversal candlestick, which could indicate FNGG has rejected the top of the pattern again. Bearish traders wanting to take a position in the ETF may choose to trade Direxion Daily S&P 500 Bear 3X (NYSE: SPXS).
- FNGG has resistance above at $6.06 and $7.26 and support below at $4.97 and $4.01.
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