Editor’s Note: The story has been updated to reflect the correct number of commodities.

As market volatility continues to captivate investors, understanding the macroeconomic forces at play is crucial. In an exclusive interview with Benzinga, Ed Egilinsky, managing director at Direxion, sheds light on the critical trends shaping the market and where investors can find promising opportunities.

Key Macro Indicators To Watch

He highlighted several factors that can potentially create some opportunities. These include, "1) the Fed starting to reverse course from hawkish to dovish, 2) outcome of the U.S. election and effect on policy, 3) ongoing global geopolitical risk, and 4) fears of a recession."

The market's swift transition from risk-on to risk-off sentiment in August, with the VIX spiking into the 60s, underscores the volatility driven by these factors. Egilinsky highlighted potential catalysts in “Nvidia earnings, PCE deflator, CPI and FOMC meeting.” These could drive significant market movements in the near term.

Exploring Long-Term Opportunities

For long-term investors, Egilinsky recommends looking beyond traditional stocks and bonds. "Historically, commodities have shown a low correlation to stocks and bonds and the ability to perform in difficult equity and bond environments, such as in 2022.” This makes them a viable option in challenging market conditions, he said.

The Direxion Auspice Broad Commodity Strategy ETF COM exemplifies this approach, he said. “Unlike other broad commodity strategies, it is not always static 100% long, and based on price trends it can get defensive by going to cash with an individual commodity when it shows a downward price trend,” Egilinsky explained.

"Currently, the COM ETF is long only three (crude oil, gold and silver) out of the possible 12 commodities” — i.e. commodities with strong performance histories.

Egilinsky added, "Commodity cycles tend to be long in duration and many believe the current Supercycle still has a significant runway.” This makes the Direxion Auspice Broad Commodity Strategy ETF a compelling choice for diversifying in the current environment.

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