To The Moon

By Jake Behan

Head of Capital Markets of Direxion Investment

Editor’s Note: Happy reading and reach out if questions on anything. Happy Thanksgiving to all!

$NVIDIA Corp(NVDA)$ put up a volatile session following its earnings announcement which underwhelmed on its revenue forecast for the current quarter, exceeding analysts’ estimates by a mere $400 million rather than a preferred $1B. Reality seems to be setting in for the company as projections have failed to show ‘blowout’ expectations for two consecutive quarters now. NVDU/NVDD were expectedly busy, $Direxion Daily NVDA Bull 2X Shares(NVDU)$ currently stands as our 4th biggest getter of inflows YTD. Per Barclays, “post earnings there seems to be no signs of demand slowing down and the strong AI narrative remains in place.”

• With the uncertainty of Nvidia earnings behind us, traders will be watching the multitude of economic data yet to hit the tape prior to the Fed’s next meeting December 18th – one of which is key and hits this week – PCE (say it with me: “the Fed’s preferred inflation metric”.) Seasonally speaking, the consolidation we have been in this last week aligns with expectations per Scott Rubner at GS; he expects a year-end rally kicking off this week with “some of the best trading days of the year into Thanksgiving.”

Inflows have been prolific post-election as traders expect Trump’s policies of lower tax rates and America-first will benefit corporate earnings. Retail is alive and well.

“Inflows into US equity funds are on course for a record year at $448b annualized, while money markets are also set for “massive” $1.1t inflows, Bank of America says.” 

• “US stocks have seen inflows for 7 straight weeks.” GS

• “Another $10B+ day of ETF inflows on Friday” NOMU

• Direxion ETFs had a big week seeing +~$925M of inflows

I would of course be remiss not to mention $Bitcoin(BTC.USD.CC)$ on 100k watch - riding high on animal spirits and hopes of broader adoption with the incoming administration.

The holiday-shortened week ahead features a pretty critical reading of core PCE (personal consumer expenditures) on Wednesday which has the potential to cement the Fed’s decision to cut or hold in December. New home sales will move the needle for $Direxion Daily Homebuilders & Supplies Bull 3X Shares(NAIL)$ and $Direxion Daily Real Estate Bull 3X Shares(DRN)$ / $Direxion Daily Real Estate Bear 3X Shares(DRV)$ on Tuesday with mortgage rates drifting higher. Jobless claims and GDP growth on Wednesday will also drive volatility and rate cut expectations.

Charts in Focus

$Gold - main 2412(GCmain)$ bounces after looking overstretched to the downside as a mentioned in last week’s note

Via GS on favorable seasonality – they are calling for a rally into year end

The Suite

·       $Direxion Daily Homebuilders & Supplies Bull 3X Shares(NAIL)$ homebuilders outperforming Thursday with existing home sales rising the most since February and prices also climbing to the highest level for any previously recorded October

o   The sector is likely to remain vulnerable with a booming us economy keeping mortgage rates hovering close to 7% per BBG

·       $Direxion Daily NFLX Bull 2X Shares (NFXL)$ turnover has been growing on a relative basis as NFLX moves up on live-events potential

·       $Direxion Daily Small Cap Bull 3x Shares(TNA)$ resumed a move up after pulling back from post-election highs – Small caps stand to benefit from the incoming administration’s potential tariff policies

·      $Direxion Daily Energy Bull 2x Shares(ERX)$ / $Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares(GUSH)$ both benefitting from geopolitical tensions as oil moves above $70 bbl once again

·     $Direxion Daily NVDA Bull 2X Shares(NVDU)$ maintains uptrend amid elevated trading around NVDA earnings

·      $Direxion Daily 20 Year Plus Treasury Bull 3x Shares(TMF)$ turnover wanes with the recent move down – inflows prolific in this name, exceeding $3B YTD

·     $Direxion Daily Gold Miners Index Bull 2X Shares(NUGT)$ / $Direxion Daily Junior Gold Miners Index Bull 2X Shares(JNUG)$ resume move up as proxy gold fleshes out a bottom after pulling back from recent highs

·      $Direxion NASDAQ 100 Equal Weighted Index Shares(QQQE)$ has seen sizeable inflows over the past week and month –  stands to benefit if mega tech underperforms

·      $Direxion Daily TSLA Bull 2X Shares(TSLL)$ checking in with a 30D volatility of 167, decidedly the most volatile fund in our lineup at the moment. Turnover has pulled back post-election as RSI drifts towards overbought

·       $Direxion Daily TSM Bull 2X Shares(TSMX)$ sees continued inflows last week, now closing in on $60M since inception in early October

·       $Direxion Daily FTSE China Bull 3X Shares(YINN)$ $Direxion Daily FTSE China Bear 3X Shares(YANG)$ both seeing outflows for the month as headwinds pile up for China

  $Direxion Daily Financial Bull 3x Shares(FAS)$ breaks out with financials seen as one of the main beneficiaries of the rotation out of tech, future deregulation also serving as a tailwind

Via GS on Financials as a key beneficiary of rotation out of mega tech

Worth highlighting that on the 5 worst days for our mega cap tech basket in the second half of the year Financials have seen meaningful outperformance...

• 10/2: -3.71%.... Financials finished +0.1%

• 7/17: -3.5%..... Financials finished +0.8%

• 9/3: -3.6%... Financials finished -0.8%

• 7/24: -4.56%... Financials finished -1%

• 8/5: -4.27%.... Financials finished -2.9%

$Direxion Daily Technology Bull 3X Shares(TECL)$ consolidating in a symmetrical triangle as traders rotate out of mega-tech into broader sectors

$Direxion Daily Energy Bull 2x Shares(ERX)$ breaking out as oil moves up on geopolitical tensions

 Of-Note

BBG on back-to-back yearly gains for the $.SPX(.SPX)$

An interesting look at Thanksgiving-week seasonality via BoFA’s Stephen Suttmeier