The Surge of Direxion Daily Semiconductor Bear 3X Shares (SOXS) Following AMD Earnings

Direxion Daily Semiconductor Bear 3X Shares (SOXS) experienced a surge of nearly 13% on Wednesday, triggered by a bearish reaction to Advanced Micro Devices (AMD) quarterly earnings. The general market was also affected by a US sovereign credit downgrade announced by Fitch Ratings, leading to a significant downturn.

Prior to this surge, SOXS had formed a bullish double bottom pattern on Monday and Tuesday, indicating a potential bullish break for the bearish fund. The semiconductor sector had been in a bull cycle, with NVIDIA Corporation (NVDA) soaring due to reports of its anchor investment in Arm IPO, a British chip designer backed by Softbank Group Corp.

SOXS is a triple-leveraged fund that tracks various semiconductor stocks, including AMD (7.23% weight) and Nvidia (8.4% weight). Traders who are bullish on the semiconductor sector can consider the Direxion Daily Semiconductor Bull 3X Shares (SOXL). It is important to note that Direxion’s leveraged funds are designed for short-term traders and should not be held for an extended period.

Analyzing the SOXS chart, the ETF surged on Wednesday but was rejected from the upper descending trend line of a falling wedge pattern. Although consolidation could continue for some time, the pattern leans towards a bullish break in the future. Currently, SOXS is trading in a downtrend, forming lower highs and lower lows. The most recent lower low was recorded on Monday at $8.17, while the last confirmed lower high was seen at $9.73 on July 26.

If SOXS manages to break above the wedge pattern and forms a higher high, it could negate the downtrend and potentially signal a longer-term uptrend. The increasing volume seen over the past three trading days suggests growing interest from bears in the semiconductor sector.

Resistance levels for SOXS are at $11.11 and $12.62, while support levels can be found at $8.17 and the psychologically significant $8 mark.

(Source: This article has been rewritten based on the original content from a financial news website)