LABD is a leveraged inverse exchange-traded fund managed by Direxion, a division of Rafferty Asset Management. The fund seeks daily investment results, before fees and expenses, that correspond to -300% of the daily performance of the S&P Biotechnology Select Industry Index. In practice, when the underlying biotech index declines by 1% on a given day, LABD aims to rise by approximately 3%, and vice versa.
The fund achieves its inverse leveraged exposure primarily through swap agreements, futures contracts, and other derivatives tied to the biotech index. Its portfolio holdings consist largely of cash equivalents, US Treasury instruments, and total return swaps — not direct short positions in individual biotech stocks. The net expense ratio stands at 1.07%, and assets under management have fluctuated around $60 million to $87 million in recent months.
The underlying S&P Biotechnology Select Industry Index is an equal-weighted benchmark comprising roughly 130 to 140 US-listed biotechnology companies spanning market capitalizations from small-cap to large-cap. Top constituents include APGE, MRNA, TWST, KYMR, and VKTX, among others. Because the index is equal-weighted, smaller and mid-cap biotech names exert outsized influence on performance relative to market-cap-weighted benchmarks, increasing the index's volatility — and, by extension, LABD's amplified price swings. I also checked this using Tickeron’s AI Screener to see how the stock compares to others in the industry.
Over the last 30 days, LABD climbed approximately 16%, rising from a closing price near $7.95 in early July to approximately $9.24 by late July. The move was not linear: the fund experienced pronounced daily swings characteristic of leveraged inverse products, with intra-period drawdowns and surges reflecting the underlying index's bouts of volatility. The 30-day advance marked a meaningful recovery from multi-month lows reached in early July, when LABD traded below $7.00.
Over the last quarter, however, LABD posted a decline of roughly 31%, tumbling from levels around $13.40 in late May. The quarterly loss underscores the powerful biotech rally that unfolded from late spring through mid-July, during which the S&P Biotechnology Select Industry Index delivered strong double-digit gains. For an inverse leveraged fund, sustained directional moves in the underlying benchmark compound daily returns in ways that can significantly erode value over multi-week holding periods, a dynamic known as volatility decay.
LABD's 30-day advance was fueled by a notable deterioration in biotechnology sector sentiment during July. The most consequential single event was ALNY's second-quarter earnings report, which triggered a single-day stock decline of approximately 28%. The company surprised investors by lowering full-year revenue guidance for its transthyretin (TTR) amyloidosis franchise by $200 million, citing a normalization of growth following the initial launch surge of Amvuttra. The move erased roughly $11 billion in market capitalization and rippled across the biotech space.
Compounding the pressure, DHR trimmed its core revenue growth outlook, with its biotechnology segment revenue falling short of analyst estimates. The life sciences tools giant's cautious commentary on customer project timing raised broader concerns about biotech R&D spending momentum. Separately, CAPR experienced a severe decline after an FDA advisory committee voted 9-3 that the company had not demonstrated substantial evidence of cardiac benefit for its Duchenne muscular dystrophy therapy candidate.
Macroeconomic forces added further headwinds. The Federal Reserve held interest rates steady at its late-July meeting, but three voting members supported a rate hike, and policymakers emphasized that progress toward the 2% inflation target had stalled. The hawkish tone pressured rate-sensitive growth sectors, including biotechnology, where future cash flows are discounted more heavily in higher-rate environments. A broader rotation out of high-beta, high-duration assets amplified the biotech selloff, directly benefiting LABD's inverse positioning.
LABD's quarterly decline of approximately 31% reflects the inverse of a powerful biotechnology sector rally that dominated from late May through mid-July. The S&P Biotechnology Select Industry Index rallied sharply during this window, driven by robust enthusiasm around obesity and metabolic drug development, a resurgence in antibody-drug conjugate dealmaking, and multiple high-value merger-and-acquisition announcements. The equal-weighted structure of the index meant that mid-cap and small-cap biotech names — which surged disproportionately — exerted significant upward pressure.
The XBI ETF, which tracks the same index, rose from roughly $128 in early June to above $164 by mid-July, a gain exceeding 28%. For LABD's -3x inverse structure, this sustained upward trend produced compounding losses that far exceeded three times the index's inverse return over the period, illustrating the daily reset mechanism's impact during trending markets. Institutional and retail inflows into biotech ETFs during the second quarter further reinforced the bullish price action that pressured LABD.
The trajectory of LABD in the coming months will depend heavily on whether the recent biotech weakness extends or reverses. Key earnings reports from major index constituents, including further updates from large-cap biopharma names, will be critical in shaping sector sentiment. Alnylam's credibility overhang following its guidance cut may take time to resolve, and markets will scrutinize prescription trend data for Amvuttra and competing TTR therapies from PFE and BBIO.
On the macroeconomic front, the Federal Reserve's policy path remains the dominant variable. If inflation proves sticky and rate-cut expectations continue to be pushed further into the future, high-duration biotech names may face additional valuation compression — a scenario that would benefit LABD's inverse positioning. Conversely, any dovish pivot or favorable inflation data could reignite the risk-on bid for biotech and pressure LABD. Investors should also monitor biotech clinical catalysts scheduled for the second half of 2026, including data readouts at major medical conferences, as positive trial results could swiftly reverse sector momentum. Regulatory developments at the FDA, including pending drug approval decisions, represent additional binary events capable of driving sharp index-level moves. Given LABD's daily reset mechanism and the inherent volatility of the biotechnology sector, the fund remains best suited for short-term tactical use by experienced investors who closely monitor their positions.
One tool I find particularly useful for staying on top of these dynamics is Tickeron’s AI Screener. It helps me quickly scan for patterns and signals across the biotech space and beyond, allowing more precise timing around volatile names like LABD.
The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer.
My name is Jimmy, and I’m a financial analyst focused on identifying compelling opportunities across the ETF market. Each day, I analyze hundreds of ETFs to uncover potential trading and investment opportunities using a broad range of market factors. For short-term trading, I rely heavily on technical analysis, including price channels, momentum indicators, support and resistance levels, trend patterns, and other market signals. At the same time, I dedicate significant attention to evaluating ETFs from a long-term investment perspective. My objective is to build a well-balanced ETF portfolio that combines core investment holdings with more tactical and speculative positions. The goal is to create a portfolio that can participate effectively in market rallies while also remaining resilient during periods of volatility and market corrections.
The Moving Average Convergence Divergence (MACD) for LABD turned positive on August 31, 2026. Looking at past instances where LABD's MACD turned positive, the stock continued to rise in 47 of 52 cases over the following month. The odds of a continued upward trend are 90%.
The Momentum Indicator moved above the 0 level on October 01, 2026. You may want to consider a long position or call options on LABD as a result. In 75 of 87 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 86%.
LABD moved above its 50-day moving average on October 01, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for LABD crossed bullishly above the 50-day moving average on October 06, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 11 of 12 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 90%.
Following a +6.54% 3-day Advance, the price is estimated to grow further. Considering data from situations where LABD advanced for three days, in 244 of 258 cases, the price rose further within the following month. The odds of a continued upward trend are 90%.
The Aroon Indicator entered an Uptrend today. In 153 of 163 cases where LABD Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 90%.
The Stochastic Oscillator has been in the overbought zone for 1 day. Expect a price pull-back in the near future.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where LABD declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 90%.
LABD broke above its upper Bollinger Band on October 06, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Category Trading