According to Eric Balchunas, last week marked the largest surge ever in leveraged ETFs, with trading volumes more than doubling the usual levels. This increase is attributed to volatile market rallies, which, despite being potentially short-lived ('dead cat bounces'), have attracted traders looking to capitalize on buying dips and selling peaks. These conditions present ripe opportunities for traders, though the profit potential on selling peaks appears diminished.

According to The Kobeissi Letter, leveraged long equity ETFs have seen a significant decline in assets, dropping $15 billion this quarter to $80 billion, marking the lowest level since Q1 2024. This decline has erased nearly 75% of the asset under management gains over the last three quarters. Despite this downturn, the total assets in leveraged long funds remain 2.5 times the size compared to previous benchmarks. Traders should be cautious of the volatility in leveraged funds and adjust strategies accordingly.

According to The Kobeissi Letter, the assets in leveraged long equity ETFs have reached a record $95 billion, marking a significant increase from the $67.6 billion during the 2021 stock market surge. This suggests an elevated appetite for risk among investors, which could influence trading strategies focused on leverage and high-risk tolerance. The surge in these assets since Q3 2022 highlights a potential shift in market dynamics, warranting close monitoring for trading opportunities.