Bubble Fears Didn’t Stop November Inflows Into This ETF

The fear of lofty valuations not supported by underlying fundamentals induced anxiety into the capital markets during November. That, however, didn’t stop inflows into the  Direxion Daily Semiconductor Bull 3X Shares (SOXL).

Through November 28, the fund took in almost $1.4 billion. Tactical investors piled into SOXL amid positive earnings from key industry movers and shakers — including Nvidia. Nvidia’s Q3 earnings results quelled fears of a potential bubble. The earnings saw the semiconductor company generate record revenue of $57 billion — an over 60% increase from the year prior.

The company has been a darling of the capital markets the past couple of years. The prospect of heavier AI and cloud computing usage would translate into more chip sales. That continues to be the case with their Blackwell graphic processing units (GPUs) leading the revenue charge.

“Blackwell sales are off the charts, and cloud GPUs are sold out,” said Jensen Huang, founder and CEO of NVIDIA. “Compute demand keeps accelerating and compounding across training and inference — each growing exponentially. We’ve entered the virtuous cycle of AI. The AI ecosystem is scaling fast — with more new foundation model makers, more AI startups, across more industries, and in more countries. AI is going everywhere, doing everything, all at once.”

Inflows Say “What Bubble?”

SOXL, which was discussed in an “ETF of the Week” episode with TMX VettaFi head of research Todd Rosenbluth, wasn’t the only fund from Direxion’s leveraged-inverse ETF suite that took in flows while November rained volatility. Through November 27, data from VettaFi PRO revealed that other tech-related funds saw inflows with single-stock ETF names tied to Meta (Direxion Daily META Bull 2X Shares (METU)), Google (Direxion Daily GOOGL Bull 2X Shares (GGLL)), and Palantir (Direxion Daily PLTR Bull 2x Shares (PLTU)) seeing activity. Rounding out the top five in November flows was the Direxion Daily S&P 500 Bull 3X Shares ETF (SPXL), showing that bullish traders didn’t shy away from broad market exposure either.

Flows also showed that bullish short-term traders stayed put in names like Nvidia and Palantir despite famed hedge fund manager Michael Burry disclosing his short positions on both of those stocks. Burry is known for his large bet against the housing market in 2008. This turned into a critically acclaimed book and movie “The Big Short.”

Looking ahead, another company that could solidify the bullish momentum is Broadcom, which reports earnings after the bell on December 11. An earnings beat could continue to build off the momentum from Nvidia, adding more fuel to SOXL’s current flame. It should also propel the Direxion Daily AVGO Bull 2X (AVL), which is already up over 90% for the year.

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