Direxion Daily Semiconductor Bull 3X Shares (ARCA: SOXL) was diving over 7% lower Tuesday, in tandem with the general market, which saw the S&P 500 gap down to trade about 0.5% under Friday’s closing price after inflation data released last week for January remained high.
The semiconductor sector has been experiencing a bull cycle, with NVIDIA Corporation (NASDAQ: NVDA) making a series of new all-time highs amid continued interest in the company’s grasp on artificial intelligence. On Tuesday, Nvidia was dropping about 6%, suggesting the double top pattern the stock printed at the $746.11 mark on Feb. 12 and Friday was recognized.
SOXL is a triple-leveraged fund that consists of a variety of stocks in the semiconductor sector. Advanced Micro Devices, Inc (NASDAQ: AMD) makes up 8.67% of the fund, while Nvidia is weighted at 7.54%.
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Trending: Why NVIDIA Shares Are Getting Hammered Today
While the tech sector has been surging over recent months, the S&P 500 printed a bearish engulfing candlestick on Friday, signaling the local top may be in for the stock market. Many stocks have become overbought recently, trading with a relative strength index that measures near or above the 70% mark, which suggested a pullback was likely near.
Nvidia is set to print quarterly earnings on Wednesday and Wall Street’s reaction to the news may set the tone for big tech stocks over the next few trading days. For the fourth quarter, Nvidia is expected to print earnings per share of $4.53 on revenues of $20.24 billion.
Heading into the event, traders who are bearish on the semiconductor sector can track the Direxion Daily Semiconductor Bear 3X Shares (ARCA: SOXS).
It should be noted that Direxion’s leveraged funds are designed for short-term traders and shouldn’t be held for a long period of time.
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The SOXL Chart: SOXL has been trading in a fairly consistent uptrend since Oct. 31 and on Dec. 14, the ETF began forming a rising channel pattern. A rising channel pattern is considered to be bullish until a security breaks down from the lower ascending trend line of the formation.
On Tuesday, SOXL tested the lower trend line as support…
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