(TZA) Direxion Daily Small Cap - Ratings and Ratios

The Direxion Daily Small Cap Bear 3X Shares (TZA) is an ETF designed to provide investors with a magnified inverse exposure to the performance of small-cap companies, specifically targeting a 3X daily inverse return relative to the underlying index. The fund achieves this objective by investing in a variety of financial instruments, including derivatives such as swap agreements and futures contracts, as well as taking short positions in ETFs that track the index.

The underlying index tracks the performance of approximately 2,000 small-cap companies within the Russell 3000 Index, selected based on their market capitalization and current index membership. Given its focus on small-cap companies, TZA is inherently exposed to the volatility and liquidity characteristics of this market segment. The fund is non-diversified, meaning it may concentrate its investments in a relatively smaller number of securities, potentially increasing its risk profile.

From a technical standpoint, TZAs recent price action has shown a last price of $13.48, indicating a decline from its 20-day and 50-day Simple Moving Averages (SMA) of $16.85 and $17.07, respectively. However, its 200-day SMA stands at $13.93, suggesting a potential support level slightly above the current price. The Average True Range (ATR) of 2.04, representing 15.13% of the last price, highlights the ETFs volatility. The 52-week high and low of $24.41 and $9.77, respectively, further underscore the significant price fluctuations TZA has experienced.

Considering the current AUM of $241.11M, TZA maintains a reasonable level of investor interest and capital deployment. However, the funds inverse and leveraged nature means its performance is closely tied to the daily movements of the underlying index, making it more suitable for sophisticated investors or those with a short-term horizon.

Forecasting TZAs future performance involves analyzing both its technical and fundamental data. Given its current technical indicators, if the SMA20 and SMA50 continue to decline, it may signal further downward pressure on TZAs price, potentially aligning with its inverse investment objective if the underlying index rallies. Conversely, if the price stabilizes above the SMA200, it could indicate a potential rebound. Fundamentally, the AUM and the overall market conditions affecting small-cap stocks will play crucial roles. If the small-cap segment experiences a downturn, TZA could potentially benefit, given its inverse exposure. However, its 3X leverage means both gains and losses are magnified. Therefore, a cautious approach is warranted, closely monitoring both the technical indicators and the overall market trends affecting small-cap stocks.