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Direxion Daily Financial Bear 3x Shares FAZ

The Fund seeks daily investment results before fees and expenses of 300% of the inverse or opposite of the daily performance of the Index. The Fund does not seek to achieve its stated investment objective for a period of time different than a trading day. The fund invests in swap agreements, futures contracts, short positions or other financial instruments that, in combination, provide inverse or short leveraged exposure to the index equal to at least 80% of the funds net assets (plus borrowing for investment purposes). The index is a subset of the Russell 1000 Index that measures the performance of the securities classified in the financial services sector of the large-capitalization U.S. equity market. It is non-diversified.


ARCA:FAZ - Post by User

Comment by Stocksnchartson Oct 19, 2010 10:57pm
116 Views
Post# 17585613

RE: Basic Question

RE: Basic QuestionFAZ did trade at $1000+ in 2009.  Much of the decline since then is due to decay.  In order to achieve the 3x leverage the ETF managers have to rebalance on a daily basis.  This means they buy/sell derivative contracts daily to maintain the same amount of leverage.  This is costly and therefore the ETF will decay in value over time.  The more choppy the mkt is, the larger the decay.    

While I expect some excellent upside to FAZ over the medium term, the lofty numbers we saw in 2009 are not realistic as targets now.  How high FAZ goes depends in large part on how fast the mkt drops.  It could be a steady decline (death spiral) or a much faster crash 1987 style.  It may even be a combination of both.  Because of the uncertainty in timing it is not easy to put any kind of long term targets on FAZ.  It's better to let things unfold and map out the targets as it happens.  Mid $30's is a reasonable place to start with for a medium term target imo just using some very rough calculations.  

I'm not a big fan of gold.  It should sell off with the mkts as we saw today.  I don't think it will come down as much though.  Just looking at HGD chart very quickly - it reminds me a lot of FAZ back in April.  What you want to watch on HGD is the 50 day MA at $11.13.  A solid break above that and $12.75 looks like a decent target for HGD, then probably fall back to backtest the 50 day, and then another run up to $14 area. 

Had a look at Apple.  Very close to a top if not topped already.  My target in the medium term is $80 with some decent support there.  Long term much more solid support comes in at $7.  This is a gently rising trendline at $7 currently.  I think it'll hit this trendline at some point, and since it is rising it may be say $12-15 or something at that time.

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