Nasdaq’s NDAQ recent announcement proposing tighter delisting measures for companies not meeting listing standards has sent shockwaves through the financial world. The new rules targeting “penny stocks” aim to swiftly remove struggling entities that fail to maintain a minimum bid price above $1 for 30 consecutive sessions.
If non-compliant, enterprises typically have 180 days to rectify the situation, with the option of seeking a second extension. However, under the proposed changes, companies with share prices dipping below $1 for 360 market sessions without improvement face immediate suspension, amplifying the pressure for swift compliance.
By elevating listing standards, Nasdaq seeks to enhance the quality of small-capitalization firms, shining a spotlight on the most viable businesses and potentially bolstering indices like the Russell 2000.
Concurrently, lesser-known entities have witnessed a surge in interest, with small-cap stocks gaining momentum as investors look beyond Big Tech for promising opportunities in the market.
The ETF Investment Opportunity
The ETFs: For investors eager to capitalize on the potential upswing in small caps, Direxion offers two leveraged exchange-traded funds. The Direxion Daily Small Cap Bull 3X Shares TNA seeks triple the daily performance of the Russell 2000, while the Direxion Daily Small Cap Bear 3X Shares TZA provides 300% of the inverse performance of the same index.
These ETFs offer short-term trading opportunities, appealing to speculators leveraging market movements within a single day. However, the compounding effects of leverage and heightened volatility in small caps may lead to value decay if held over extended periods.
Analyzing the Performance
The TNA Chart: TNA experienced significant fluctuations recently, soaring to a monthly high of $49.09 before settling around $37. Presently, the ETF is striving to maintain its position above key support levels for continued bullish momentum.
- Following a dip below its 200-day moving average earlier, TNA swiftly rebounded, signaling resilience in the face of market challenges.
- Bulls eye a crucial support at $38, with the $40 threshold looming as the next target for sustained growth.
The TZA Chart: In a similar fashion, TZA witnessed notable swings, dropping to a low of $13.51 within the month before climbing back to nearly $17. The inverse ETF grapples with technical barriers in its climb back to previous levels.
- Struggling below its 50-day moving average, TZA struggles to regain key support levels for a sustained rally.
- Bears aim to secure the $18 threshold as a stepping stone towards the psychologically significant $20 mark.
