Direxion NAIL ETF – Bull 3x Homebuilders & Supplies

Opportunities in this extremely aggressive 3x ETF


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Direxion NAIL ETF

Direxion Daily Homebuilders & Supplies Bull 3X NAIL ETF

Key Statistics


Minor Support Level 81.88 Minor Resistance Level 109.00

Major Support Level 23.31 Major Resistance Level 131.78

Minor Buy Signal 110.62 Minor Sell Signal 80.00

Major Buy Signal 134.37 Major Sell Signal 20.01


During the past six months, the US economy has been gaining momentum. In fact, every sector of the domestic economy is displaying signs of positive growth. Even the lowly energy sector, which was in a brutal bear market in 2016, has sprung to life.

Based on performance data from Standard & Poor’s, there are 11 major market sectors which represent 58 different industries. Taken together, these 58 industries provide a “big picture” view of our nation’s economy. Many of these industries are operating at full capacity, enjoying their strongest growth in several years. Even though all industries are performing well, there is one group that is currently “head & shoulders” above the rest. The leader of the pack is homebuilders & supplies.

During the past 12 to 15 months, home construction has exploded across the United States. According to the US Census Bureau, housing starts, building permits and home completions have reached their highest level since 2007. Please review the following table.

US Housing Data 2017

Housing Starts Building Permits Home Completions

January 1,236 January 1,300 January 1,083

February 1,288 February 1,219 February 1,161

March 1,189 March 1,260 March 1,194

April 1,154 April 1,228 April 1,098

May 1,129 May 1,168 May 1,180

June 1,217 June 1,275 June 1,230

July 1,185 July 1,230 July 1,194

August 1,172 August 1,272 August 1,091

September 1,159 September 1,225 September 1,081

October 1,261 October 1,316 October 1,184

November 1,299 November 1,303 November 1,152

December 1,192 December 1,302 December 1,177

Note (thousands of units)

A strong housing market is an excellent sign of an improving domestic economy. It indicates that consumers feel very confident about their own personal finances. Consumers rarely purchase “big ticket” items unless they have a great deal of security concerning their employment situation. All across the board, the US economy is operating on all cylinders. The home building industry is setting the pace.

On August 19, 2015, the Direxion family of exchange traded funds introduced the Daily Homebuilders & Supplies Bull 3X ETF. The ticker symbol is NAIL. This ETF tracks the daily performance of the Dow Jones US Select Home Construction Index (DJSHMBT). NAIL is a leveraged ETF. Specifically, it seeks to generate a return that is 300% greater than DJSHMBT.

NAIL is an extremely aggressive ETF, not suitable for many investors.

NAIL is invested across the board in a variety of home construction related companies. The areas of investment include home construction and producers, sellers and suppliers of building materials, furnishings and fixtures along with home improvement retailers. There are a total of 49 holdings in the ETF. The top five holdings include DR Horton, Lennar Corporation, NVR, Pultegroup and Toll Brothers.


NAIL has enjoyed an incredible rally over the course of the past few months. The bulls are definitely in control of the short-term momentum. However, it does appear as though NAIL completed a short-term top on January 24th @ 110.62. The bears need a weekly close below 81.88 to push the momentum in their favor.

Based on the Aroon Oscillator, NAIL has a very aggressive overbought reading of +92. The Aroon Oscillator is programmed differently than most stochastic indicators. The oscillator fluctuates between -100 and +100. A reading of 0 would indicate a neutral position. Therefore, a reading of +92 with NAIL is considered sharply overbought. This partially explains the big decline in NAIL on January 25th.


During the past few years, there has been a never-ending parade of economic pundits and financial experts who have erroneously forecasted the demise of the US economy. This group is known as the “doom & gloom” crowd. In fact, these financial professionals have been negative on the domestic economy since the recovery began in 2009. However, over the course of the past six months, the “doom & gloom” crowd has become rather quiet. They have finally accepted the fact that the United States is in the midst of a healthy economic recovery.

As we discussed previously, all major market sectors (as outlined by Standard & Poor’s) are generating positive performance. The overwhelming majority of the industries within each sector are also performing at a high capacity.

The homebuilding industry is a very important component of the economy because it represents the confidence that consumers have in the economy along with their ability to obtain credit. A home is the largest big ticket item that a consumer will purchase over the course of her/his life. The average cost of a new home in the United States is $377,100. It’shighly unlikely anyone would spend $377K unless they felt secure with their employment situation. It’s no coincidence that new home sales are surging while the US unemployment rate is at its lowest level in 17 years.

Many financial analysts are concerned that building activity is expanding at an unsustainable pace. They argue that the current building boom is reminiscent of the real estate bubble from the mid-2000s. Most likely, this is simply not true. Today’s surge in new home construction is based on internal demand emanating from consumers’ improving financial situation. It is not based on speculative fever in the real estate market. These days, the speculative fever can be found in financial assets like stocks and bitcoin, not real estate.

It’s rather difficult to analyze NAIL from a long-term perspective because the ETF has only been in existence since August 2015. However, the majority of the price action has been extremely bullish since its inception. In fact, NAIL has increased 216% during the past 52 weeks.

The next important long-term resistance level is 131.78. The long-term trend remains bullish as long as NAIL stays above 23.31.


Please review the attached 4-month chart of NAIL. Despite the sharp decline on January 25th, the bulls are in control of the short-term trend. The next resistance level is 109.00. A weekly close below 81.88 would turn the short-term trend bearish.

Direxion NAIL ETF


The attached chart contains all historical price data for NAIL. The ETF traded sideways for the first 18 months of its existence. A major breakout occurred on March 10, 2017. NAIL has produced a massive rally following the bullish breakout. In order to upset the trend, the bears need a weekly close below 23.31.

Direxion NAIL ETF

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