GET DAILY SIGNALSSPXL vs. SPXS: Pros and Cons of 3× Bull and Bear S&P 500 ETFs SPY
As volatility and geopolitical risks persist into 2025—now under President Trump’s renewed tariff pressures—traders and investors alike are seeking tools to navigate choppy markets. Direxion’s leveraged ETFs, SPXL (3× Bull) and SPXS (3× Bear), offer magnified exposure to the S&P 500 but in opposite directions. Below, we outline their key advantages and drawbacks to help you decide which might fit your strategy.
What Are SPXL and SPXS?
SPXL (Direxion Daily S&P 500 Bull 3× Shares)
Seeks daily investment results of 300% of the S&P 500’s performance, before fees and expenses
SPXS (Direxion Daily S&P 500 Bear 3× Shares)
Seeks daily investment results of –300% (inverse 3×) of the S&P 500’s performance, before fees and expenses
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Both funds rebalance daily, meaning they are designed for short-term tactical trades rather than long-term holds
Pros
Strong Liquidity & AUM
With over $3 billion in AUM and multi‑million share daily volume, SPXL offers tight bid‑ask spreads and easy execution
Bullish Leverage
In a rising market—especially if the Fed cuts rates—SPXL can generate amplified gains, capturing 300% of the S&P 500’s upside on a daily basis
Cost‑Effective for Short‑Term
Its expense ratio (0.87%) is competitive among 3× leveraged ETFs, helping to preserve returns when markets move in your favor
Cons
Compounding & Tracking Risk
Daily rebalancing leads to compounding effects; over multiple days, returns can deviate significantly from 3× the index due to volatility decay
High Volatility
Gains and losses are magnified; a 1% move in the S&P 500 translates to a 3% move in SPXL, making it unsuitable for risk-aware approach‑tolerance investors
Not for Buy‑and‑Hold
SPXL is designed for intraday or very short‑term trades. Holding it unmonitored can lead to unexpected losses if market conditions reverse
Pros
Powerful Downside Hedge
SPXS offers 300% inverse exposure, enabling traders to profit from, or hedge against, market downturns without a margin account
Exceptional Liquidity
With nearly 80 million shares traded daily, SPXS ensures swift execution even in stressed markets
Short‑Term Risk Management
In volatile or bearish environments, SPXS can protect portfolios by offsetting losses in long positions.
Cons
Compounding & Tracking Risk
Like SPXL, daily rebalancing introduces volatility drag. Over time, SPXS may underperform –3× the index due to compounding effects
High Cost
A 0.93% expense ratio can erode returns, especially if markets don’t move decisively downward
Unsuitable for Long‑Term
SPXS is intended for tactical trades. Holding it through choppy markets can lead to significant losses if the index rallies unexpectedly.
When to Use Each ETF
Scenario Recommended ETF
Short‑Term Bullish Outlook SPXL
Short‑Term Bearish or Hedging Needs SPXS
Long‑Term Passive Investment Neither; consider non‑leveraged ETFs
Active Traders can use SPXL to capitalize on upside momentum and SPXS to hedge or profit from downturns. Both require daily monitoring and disciplined entry/exit rules.
Long‑Term Investors should avoid these due to compounding risks and elevated expense ratios. Passive, non‑leveraged index funds are more appropriate.
Conclusion
SPXL and SPXS offer sophisticated traders powerful tools to amplify their market exposure on both sides of the S&P 500. SPXL shines in bullish, short‑term scenarios with strong liquidity and a relatively low expense ratio. SPXS serves as an effective hedge or profit vehicle in bearish markets, boasting exceptional trading volume. However, both carry significant risks—daily compounding, high volatility, and fees—that make them unsuitable for buy‑and‑hold investors. Understanding these pros and cons is essential before deploying either 3× ETF in your portfolio.
Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
SPY sees its Stochastic Oscillator recovers from oversold territory
On October 21, 2026, the Stochastic Oscillator for SPY moved out of oversold territory and this could be a bullish sign for the stock. Traders may want to buy the stock or buy call options. Tickeron's A.I.dvisor looked at 44 instances where the indicator left the oversold zone. In 38 of the 44 cases the stock moved higher in the following days. This puts the odds of a move higher at over 86%.
Technical Analysis (Indicators)
Bullish Trend Analysis
Following a +0.86% 3-day Advance, the price is estimated to grow further. Considering data from situations where SPY advanced for three days, in 297 of 358 cases, the price rose further within the following month. The odds of a continued upward trend are 83%.
The Aroon Indicator entered an Uptrend today. In 347 of 419 cases where SPY Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 83%.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 16, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on SPY as a result. In 57 of 78 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 73%.
The Moving Average Convergence Divergence Histogram (MACD) for SPY turned negative on October 15, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 52 similar instances when the indicator turned negative. In 39 of the 52 cases the stock turned lower in the days that followed. This puts the odds of success at 75%.
SPY moved below its 50-day moving average on October 22, 2026 date and that indicates a change from an upward trend to a downward trend.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where SPY 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 76%.
SPY 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.
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