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Vet67to82 (< 20)

Direxion Financial Bear 3X Shares (FAZ) for 4/20/2009



April 18, 2009 – Comments (1) | RELATED TICKERS: FAZ , WFC , BAC

I track FAZ as point, and counterpoint, to FAS, XLF, etc ... to keep me honest, as well as other shorts and ultrashorts ... Hint: I like to watch the "On Balance Volume" as one of your leading indicators of the market direction in these stocks. Keep in mind the speed these tigers change direction at, is hyperfast ... and can be right one minute and buried the next.  Ouch.

However, while FAS (the Bull 3x) holds stock and derivatives, FAZ is primarily derivatives to get the (- 300%) "BEAR" which makes it a lot harder to calculate fundamentals and value. I can do my fundamentals, chart and backtest: XLF, FAS, JPM, WFC, GS, BAC, BK, USB, V, TRV and I made a layout specifically for that ... so, I have a real good idea of the FAS  pieces of the puzzle, how they fit, and what the overall picture is shaping up to look like.

Here is the FAZ link:

I recommend going to the FAZ link. There you'll find a brief summary explanation of the FAZ objective and it's basis on the Russell 1000 Financial Services Index. Look at the blue box to the right. You can download the Fact Sheet and the second line says you can get the daily holdings (csv) - csv stands for comma separated values. This is what it says:

Account Ticker,Stock Ticker,Cusip,Security Description,Shares,Price,Market Value
FAZ,,RGUSFL,RUSSELL 1000 FINANCIAL INDEX SWAP,-4673700.00,595.63,-2783795931
FAZ,,S9999021C,AIM S/T INVEST. TRUST TREASURY,665816980.05,1.00,665816980.1
FAZ,,S99990210,AIM S/T INVEST. TRUST TREASURY,238904697.46,1.00,238904697.5

Soooo, with FAZ you are investing in derivatives and swaps. Possibly, the very products that everyone is so angry with for causing the global meltdown .... but, mine is not to judge,
I haven't been able to get a handle on the pieces, "derivatives", within FAZ ... that means no facts, no facts = NO educated guess ... just a "gut feel", or 100% gamble. I'm not comfortable with that. Some people are.

Here's what I do know about FAZ. Hot off the chart:

Relative strenght: 33.2010 and trending DOWN
MACD : -9.16237 yep, minus 9.16237 using a 9 day EMA (exponential moving average)
Stochastic Oscillator: 8.01830 ( on a scale of 0 - 100 )

... but, like the tv commercial says, there's more ...

For 4/17/2009 the closing price was 8.9000.

Overall, the bias in prices is: Downwards.

Short term: Prices are moving. (down)

Intermediate term: Prices are trending. (down)

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 34.63.

The projected upper bound is: 34.56.

The projected lower bound is: -18.58.

The projected closing price is: 7.99.

Note: these price projections are for reference only, and can be easily exceeded by the market.

As you can see, there is a possibility, in the math, for a possible correction to 34.56 - 34.63, I calculate that to determine a risk reward/reward ratio ... and, as I said, to keep me honest.

1 Comments – Post Your Own

#1) On April 19, 2009 at 4:12 PM, Vet67to82 (< 20) wrote:

This is a "short term" look from my FAZ intraday charting - based on a 10 day - 15 minute chart analysis:

Moving Average Price Compare
Friday, FAZ closed above its 13 minute moving average. This is generally considered to an indication of a bullish trend.

Moving Averages
No current signals

Bollinger Bands
FAZ is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.

The Stochastic Oscillator is registering a strong bullish signal as the %K has crossed above the %D and the oscillator recently moved above the critical value of 20 and is no longer oversold.

On Balance Volume
The On Balance Volume indicator (OBV) presently offers a bearish signal. This is because the slope of the indicator is negative and shows that there is a lack of buying interest.

Price Channel
FAZ is trading above its 5 minute price channel. This means that the stock is trading at a new high for the period and the price channel will update to reflect that.

... My take is that while some holders increased their FAZ positions, others lightened up ( the On Balance Volume) and those bailing were in the majority, due to the uncertainty surrounding the BAC earnings announcement, release, and conference call for Monday A.M. Even for the "experts", It takes time to digest the report. That means INCREASED volutility. There may be opportunites to enter and exit FAZ that'll only last MINUTES. The media will generate a lot of quick "news" releases as they attempt to assess the report and try to scoop other agencies by releasing positive (negative) points first. The conference calls always bring up questions and answers that are not in the report ... so those "answers", hesitations in answering, and even "non-answers" can move a stock.

Everyone, bull or bear, should listen to a couple of conference calls. The education and the info can be priceless.

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