A Quick Look At SOXL
An opportunity to run towards the fear. But pack a stop-loss if you do.
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What Could Possibly Go Wrong?
$SOXL. 3x levered play on the semiconductor sector. You know, the sector that gets smashed when the economy declines. The sector that is the canary in the coalmine of tech demand. The sector that even when revenue is on the cyclical floor, has to spend big on capex to keep ahead of the competition in the next generation of chips. That sector. Oh and also even after the tech wreck, AMD is still trading north of 8x revenue, and since bears are talking about the Fed funds rate needing to north of 5%, not only is the ‘e’ in the sector at risk from the economy, the ‘p’ is at risk from the not-so-transitory J-Po.
But …. look at the chart in SOXL. Major upside potential and a proximate low which you can use as a stop-loss zone. And a Fibonacci ladder offering profitable offramps along the way. So, if you want to position for the pain trade which is, a move to the upside (since most everyone is a bear these days), consider a long position in SOXL, like this:
You can open a full page version of this chart, here.
Your decision as always.
Cestrian Capital Research, Inc - 20 May 2022
DISCLOSURE: Cestrian Capital Research, Inc staff personal accounts hold no positions in SOXL at the time of publication but intend to open new long position(s) in SOXL with targets and stop levels in accordance with this note.