The Triple X R2000 Small Cap Strategy

Small Caps, Big Gains: Ride the Momentum

Small-cap stocks can offer a tempting proposition for investors seeking strong returns. Here's a closer look at why you might consider including them in your portfolio:

  • Big Growth Potential: Small companies have room to grow much faster than established giants. This translates to potentially significant gains for investors who bet on the right companies.

  • Under the Radar: Small-cap stocks receive less analyst coverage compared to large-cap stocks. This means there's a chance to uncover hidden gems before the market fully recognizes their potential.

  • Acquisition Targets: Smaller companies are attractive targets for acquisitions by larger firms. If you invest in a company that gets acquired, you could see a substantial windfall.

For aggressive traders seeking to amplify their exposure to small-cap opportunities, consider the Direxion Daily Small Cap Bull Shares (symbol TNA). The Triple X Russell 2000 Small Cap Strategy employs the following technical indicators:

  • Buy Signal: One month return

  • Sell Signal: 3-Month RSI

A strategy that combines one-month return on the buy side and Relative Strength Index (RSI) on the sell side can work well for several reasons. Firstly, using one-month return helps identify stocks that have exhibited recent positive momentum, indicating potential for further upward movement. On the sell side, RSI serves as a technical indicator to identify overbought conditions, signaling when a stock may be ripe for profit-taking or a trend reversal. By combining these two factors, the strategy capitalizes on short-term momentum while also providing a disciplined approach to exiting positions when they become overheated, helping to lock in gains and mitigate downside risk.

In a nutshell, the Strategy attempts to go long when small cap stocks get hot (one-month return) and seeks to move to cash before they get too hot (RSI).

A Word About the Direxion Daily Small Cap Bull 3X Share (symbol TNA)

The Direxion Daily Small Cap Bull 3X Shares seek the daily investment results, before fees and expenses, of 300% of the performance of the Russell 2000® Index. These leveraged ETFs seek a return that is 300% of the return of their benchmark index for a single day. The funds should not be expected to provide three times or negative three times the return of the benchmark’s cumulative return for periods greater than a day.

Index Information

The Russell 2000® Index (RU20INTR) measures the performance of approximately 2,000 small-capitalization companies in the Russell 3000® Index, based on a combination of their market capitalization. One cannot invest directly in an index.