Direxion's Micron Bull And Bear ETFs Allow Investors To Trade The Tech Tug-of-War

Artificial intelligence quite evidently seems to have been a growth driver for computer memory and data storage specialist Micron Technology Inc MU. Throughout the first half of last year, MU stock shot skyward, at one point exceeding $150 per share. However, starting from the back half of 2024, momentum noticeably faded, leading to questions about forward viability.

On paper, many expect Micron to easily hitch a ride on the waves of the broader innovation ecosystem. For example, a study released last year by Cognizant Impact estimated that generative AI will spark a $1 trillion impact for the U.S. economy within the next ten years. Such rapid integration – and disruption – calls for infrastructural upgrades, a dynamic that organically benefits Micron.

At the same time, this bullish assessment hasn't always lifted MU stock. In particular, Micron seems to have failed to deliver the goods for its fiscal first quarter, posting revenue of $8.71 billion and thus slightly missing the consensus estimate of $8.72 billion. It did, however, post adjusted earnings per share of $1.79, exceeding the expected view of $1.76.

Nevertheless, many investors quickly rushed for the exits, leading to volatility for MU stock. Management admitted to consumer-oriented markets being weaker in the near term, which raised questions about excessive valuations amid an apparently slowing market.

Despite the challenges, it seems that bulls may have begun to view the latest volatility as a deep-value proposition. Since the end of December, MU stock has gained almost 16%, buoyed by the promises of a strong second-half setup. Specifically, AI-driven demand for high bandwidth memory (HBM) and enterprise solid-state drives (eSSDs) may boost sales, along with a cyclical recovery in non-AI segments such as smartphones and PCs.

The Direxion ETFs: Investors wanting to jump into the fray but without the complexities of advanced trading strategies may consider two Micron-focused exchange-traded funds. First, the Direxion Daily MU Bull 2X Shares MUU is a leveraged fund that seeks daily investment results of 200% of the performance of MU stock.

Second, those who are bearish on Micron's prospects may consider the Direxion Daily MU Bear 1X Shares MUD, which seeks 100% of the inverse performance of MU. Both funds can be traded just like any other security, offering convenience for speculators. However, it must be noted that exposure to MUU and MUD should not last longer than one day due to the daily compounding effect.

The MUU ETF: Making its debut in October last year, Direxion's 2X MU bull fund has broadly suffered due to timing, losing almost 26%. Nevertheless, recent sessions have shown some promise for bullish speculators.

Earlier this month, MUU fell straight through the critical $20 support level. Quickly, the bulls mounted a recovery rally, bringing the price back above this psychologically significant milestone.
Moving forward, it appears important that the optimists establish control, with the first major priority being a jump to technical resistance at $22.

The MUD ETF: Also making its debut last October, Direxion's MU bear fund has witnessed a smoother journey, gaining just over 2%. Still, some recent volatility presents questions for Micron pessimists.

MUD has consistently traded above the $22 support line, which is imperative to avoid a costly trend reversal.
However, for the bears to build momentum, the inverse fund would need to secure the $25 level. From there, a return to $28 to stage a push to $30 would be the next logical target.