SOXL at $46—dare to buy the dip?
It’s now at $45.97, up 12.48% on the day. It looks like a recovery. But on November 5, it had just plunged 38.7%. From its June high of $302, it had at one point fallen more than 86%.
South Korean retail investors are the clearest example: from October 1 to November 5, they bought a net $4.276 billion. Over the same period, the share price fell from $153.69 to $40.87. The more it fell, the more they bought—and the more they bought, the further it fell. They may have had the direction right, but the instrument buried them.
The problem is leverage decay: SOXX fell 12.8% over three days, while SOXL fell 40%—more than three times as much. Sideways trading, volatility, and repeated swings all eat away at your principal.
$46 is a recovery bounce after panic, not confirmation of a bottom. Around $49 is a rebound zone, not a safe zone. Only a high-volume move above $55 would point to a short-term reversal; if it falls below $47, the falling knife could keep dropping.
If you’re going to touch it, keep your position small and set your stop-loss first. Don’t treat a leveraged ETF like a spot asset you can just hold through a downturn. SOXL isn’t suited to buying the dip and holding long term; it’s only for those who can time their entries and exits and move quickly. $SOXL
It’s now at $45.97, up 12.48% on the day. It looks like a recovery. But on November 5, it had just plunged 38.7%. From its June high of $302, it had at one point fallen more than 86%.
South Korean retail investors are the clearest example: from October 1 to November 5, they bought a net $4.276 billion. Over the same period, the share price fell from $153.69 to $40.87. The more it fell, the more they bought—and the more they bought, the further it fell. They may have had the direction right, but the instrument buried them.
The problem is leverage decay: SOXX fell 12.8% over three days, while SOXL fell 40%—more than three times as much. Sideways trading, volatility, and repeated swings all eat away at your principal.
$46 is a recovery bounce after panic, not confirmation of a bottom. Around $49 is a rebound zone, not a safe zone. Only a high-volume move above $55 would point to a short-term reversal; if it falls below $47, the falling knife could keep dropping.
If you’re going to touch it, keep your position small and set your stop-loss first. Don’t treat a leveraged ETF like a spot asset you can just hold through a downturn. SOXL isn’t suited to buying the dip and holding long term; it’s only for those who can time their entries and exits and move quickly. $SOXL