Direxion Daily Semiconductor Bull 3x Shares (SOXL) experienced a sharp pre-market plunge of 5.34% on Tuesday. The leveraged exchange-traded fund, which seeks daily investment results equal to 300% of the performance of the Philadelphia Semiconductor Index, saw significant selling pressure following an extended period of gains in the underlying semiconductor sector.
The decline comes as the Philadelphia Semiconductor Index pulls back after posting its longest winning streak since 1994, with 18 consecutive days of gains that accumulated a monthly rally of approximately 38.5%. Market participants attributed the movement to technical gap-filling dynamics and profit-taking activity after the parabolic run in semiconductor stocks.
Adding to the selling pressure, prominent investor Michael Burry publicly warned that the semiconductor rally was largely driven by technical factors rather than fundamentals. Burry stated he would sell semiconductor long positions at current levels, expressing skepticism about the sustainability of the chip-shortage narrative tied to data-center expansion. As a triple-leveraged product, SOXL amplifies daily index movements by a factor of three, resulting in magnified price swings in both directions.