The following is technical analysis on Financial Bull ( FAS ) and Financial Bear ( FAZ ) for 3/24/09.These two stocks are extremely volatile and if day traded correctly or even slightly correctly, could make you boat loads of money. The important thing to note is that FAS and FAZ are trading vehicles, not long term investments. Take profits quickly and regroup!
When I trade these two stocks, I always follow the stock in the uptrend and if the uptrend is broken, will help me trade the other one. In the current case, FAS is the stock I watch to tip me off on FAZ because FAS is currently in the short term uptrend. For example, yesterday when FAS was trading around $6.15, FAZ was around $26.50. Given how these two stocks work ( because they are inverse and reset each day ), the huge move yesterday really hurt FAZ. Because of the huge move up in FAS late yesterday, If FAS would go back to $6.15 today, FAZ would only be at $23 or so. On March 6th, when the stock market was hitting the lows, FAZ was trading at $104.60 while FAS was at $2.70. If FAS would have went down $0.20, FAZ would have went up $10 per share.
FAS Technical Analysis:
FAS has resistance from the other day at $7.80, if FAS breaks out through $7.80, I believe it could make a run back toward $10. This would sink FAZ and send it back into the single digits. The 50 day moving average on FAS is currently at $7.60 and is going down everyday. This will be a big resistance level in addition to the $7.80 high. FAS has solid support between $6.00-$6.31. If FAS would break $6, this would give me a technical signal to get back into FAZ, but you would still want to keep watching FAS that particular day. So in short, I am watching $7.80 and $6.00-$6.31 on FAS.
Hopefully this helps and doesn't confuse people, but this has been very successful for me. It is very important to know how these ETF's work, especially the 3 to 1 levered ETF's. If not, you could get really crushed!! Since these two stocks are highly levered ETF's, there is really no need to take huge position!! Small positions can make you nice profits.
What is FAS and FAZ?
Financial Bull 3x ( FAS ) - The investment seeks to replicate, net of expenses, 300% of the daily performance of the Russell 1000 Financial Services Index( ie, Long Position ). The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.
Financial Bear 3x ( FAZ ) - The investment seeks to replicate, net of expenses, 300% of the inverse daily performance of the Russell 1000 Financial Services Index. (ie, Short Position ). The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.
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