3:58pm
Volume today is almost as strong as yesterday despite today not being a fed decision day, this looks a lot like a reversal, especially if we end under 38.2%.
3:48pm.
Market managing to bounce a little at the 38.2% YET AGAIN! But this time the XLF and MS are not joining in. SPY could be going in for a head and shoulders.
3:40pm
Bears taking this back to the 38.2% retracment, is today the first day of subwave 5?
3:34pm
Wow, massive up candle here, bulls doing all they can to keep the market above the 38.2% retracement. I believe the next time we touch the 38.2% retracement we’ll form a bear flag and break. The bulls need to push higher before we hit the 38.2% retracement.
2:59pm
Bears finally breaking the ascending channel support level, there are a couple other channel support lines that could be drawn that aren’t as steep, but lets concentrate on the 38.2% retracement of this subwave 4 which is being tested for the second time today. A break of that will be significant.
12:28pm
I have to leave for a bit, but keep in mind that we are constantly hitting against channel support, and that lures more bulls in. If the bulls can’t rally this market up higher, then they’ll run out of long positions.
12:12pm
We hit the 38.2% retracement about 10 minutes ago, and every since the bulls seem to be in charge, i tlooks like we’re back to the same mentality. Once we break the 38.2% retracement which may coincide with the support of the ascending channel, I think the mentality will change. The question is when do we get enough bears to pile in?
11:52am
MS broke a multiday H&S that should take us to a target of 18$.
11:51am
Strongest support for the SPY is the ascending channel that has been forming over the past few days. We are about to touch it’s support. It will be around 78.50$.
11:47am
The XLF looks much worse than the SPY. The XLF is starting to look like it’s in a freefall on a 10 minute.
11:28am
The head and shoulders that weren’t forming i the past few days, are managing to form now a days. Whatever this is, the bears seem to have temporary control in the market.
11:15am
Everytime we felt like we were going lower we reversed higher by the 38.2% retracement, that’s a key level to break. Today’s 38.2% retracement lies at 78.82$.
11:13am
MS under incredibly selling pressure, it looks like we’re continuinig what we’ve seen in subwave 3. Maybe this is subwave 5 here.
11:05am
Lots of H&S out there, but we need them to break to see new lows. XLF looking weak for once, that might help bring down the market. Yeilds are falling once more, VIX is showing very strong inverse head and shoulders, and looks like it wants to run up here.
FAZ +15.37%
S&P -1.30%
Today’s FAZ lever of S&P = -15.37/1.3 = -11.8
understand leverage, but can you enlighten further?
Unersaettlich (or anybody for that matter).
Do you know what FAZ is really investing in (I don’t know). I suspect it’s options on the major banks or banking indexes but I’m really guessing.
If you don’t know, no worries, I’ll do my “homework” when I have a few spare minutes. I know sometimes it is hard to figure this out.
great question–have made several calls (broker, etc.), checked RIFIN, still no answer. Investors got squeemish today as FAZ was not a true 3x inverse relationship to XLF. Noticed AIG up during this conversation, along with C (who is in process of converting preferred to common). Guess that this is a “guess”, which puts investors in a quandry.
$RIFIN.X
Asked before, but how can I get there? Tried several outlets.
3x short Russell 1000 Financials
Index Sector Weightings
Banks Diversified 34.73%
Diversified Financial Services 21.38%
Real Estate Investment Trusts 11.34%
Insurance: Multi-Line 10.07%
Financial Data & Systems 5.81%
Insurance: Property-Casualty 4.00%
Securities Brokerage & Service 3.85%
Asset Mmgnt. & Custodian 2.31%
Insurance: Life 2.15%
Consumer Lending 1.57%
Banks: Svgs Thrift & Mort. Lend. 1.53%
Commercial Fin. & Mort. Co. 0.95%
Real Estate 0.29%
Thanks–big time!
Today, FAZ went UP 11.8x as fast as the S&P went DOWN. That is because FAZ (and FAS) lever, supposedly by 3x, FINANCIAL STOCKS, which themselves lever the S&P. The unlevered financial ETF XLF was -7.93% today. FAS was -20% or so. Thus, we owners of FAZ were actually getting screwed; FAZ should have been up by about -3 x -7.93%, close to 24%. While the FAS owners were hurt less than they should. have been. This is where Robert CPA comes in — it is impossible to make this stuff come out exactly right every day with all the swaps and other derivatives that he will no doubt dig out of the Direxion Funds web site. However, I have downloaded tons of data for several levered ETFs and calculated long-term average daily leverage, and it usually comes out pretty close to the nominal value (minus fees) if you average up the leverages of individual days. Some people screw it up by getting lazy; they take the prices of FAZ and XLF on two widely separated days, and get all outraged about being ripped off when the differences reflect an aggregate leverage of something like -1.7, although they make less noise when it comes out to -4.2 or so. I have also generated random prices and forced a precise lever of -3 on them each day. The cumulative effect over a month or even a week can vary from -3x by a huge amount with the right constellation of random numbers, in spite of each individual day’s leverage being forced to be exactly the nominal value of -3.
Thanks Uner.
Whew, that’s a mouthful Uner. I understand the ETF’s can never replicate the indexes exactly, and with FAS/FAZ moving so fast it must be ever more difficult to build a portfolio of underlying assets that moves 3 to 1. Nevertheless, they must be something to watch that will give an indication of when it will pop / drop. Maybe it’s options on XLF? I suppose your statement that you’ve been tracking them and over a long enough timeframe they work is comforting.
I’ll tell you, in my experience, EEV does not work properly (or so it seems) and I know Shanky was upset with one ETF that he said he wouldn’t buy because it doesn’t seem to work properly.
One thing I notice at least of late is that shorting fas will result in a better gain than long Faz, and vica versa. The differences are material.
Unfortunately, my larger trades are in an IRA, so I cannot short. (** Which is probably a good thing, going long I know my exposure, going short, it’s possilble the sky is the limit).
Robert – can you shed more light on the shorting FAS vs buying FAZ theory …
I know Uner mentioned this as well … you may not be able to short in an IRA – however you can buy puts in it … you need an additional level of approval through your broker to do so …
… I use E-trade.
I also trade in an IRA and currently hold 2 puts on FAS … not at a great price though … but they recovered somewhat today
If I try to create a standard deviation, would you recommend weekly, monthly?
I just wanted to thank Idan for the great job he’s doing here. IMO, he takes way too much crapp from some members. Nobody likes to lose $. Idan is posting his best guesses and he’s putting his money where his mouth is. And, when he’s criticized by some members for hiding, he responds with the utmost respect and a simple apology. You guys should read Kenny’s replys when the bloggers make silly coments, he speaks his mind.
Just because the odds are that 00 will not come up in roulette, it happens, and sometimes twice in a row. You can’t blame Idan if he gives you his FEELING on the most likely scenario in the market and it doesn’t pan out. Since I’ve been on this site, he’s been dead on much more than 50% of the time.
For what it’s worth, Idan passes the most important test for me with flying colors. He helps me make smarter, educated trades and he helps me to grow my investment account. Thank you Idan, and all of the other posters for all of your valuable input in this “strange” market.
Thx, I appreciate that! best!
big moves in FAZ after hours.
SPX target i posted now hit …. no problems people. everything ..only taking longer as they play goalie with levels to keep selling worthless calls.
im expecting a decent decline in the AM … and further… and then a late day POP to the upside. .. ending in the 770-790 range … but too be honest .. any SPX close above 700 works well for the options writers so maybe the work is done.
Recall your comment last week that 780 would be a pipedream for option writers. Happened, and okay with me, as the overall goal is not lost. Think your perception is excellent–can’t call timing perfectly.
nubear,
agree… and here we are… aaaaaaaaaamazing you must say looking back. and then im short CLI hoping they cut the dividend.. they cut it 2 days ago and the stock rallies. shareholders clearly aren’t in stocks for the dividend… they are in it for voting rights?
further amazed we rallied this hard as thier is little pain at the 750 range and furthermore people were buying up worthless calls anyway. so, not sure the purpose of this move … of course i’m not on the inside.
31.38, up from a close of 30.40 BEARGASM BEARGASM BEARGASM
CNBC
US Is Rushing to Get More Control Of Financial Giants
http://www.cnbc.com//id/29386561?__source=yahoo|headline|quote|text|&par=yahoo
gov will take over AIG and C, good for FAZ tomorrow
notice c and aig down in ah–about time. thanks for info.
Both are overdue to come back to earth.
Interesting how this news comes out on front pages once the work for OPEX is almost done
http://money.cnn.com/2009/03/19/news/banks.books.fortune/index.htm?postversion=2009031915
Anybody recommend buying FAZ after hours?
I recently checked the price action of FAZ and even when it gaps up, it seems to trace back to its previous close nine times out of 10.
Waiting to buy in the morning saves you the potential worry of the fed pulling a rabbit out of its hat before the market opens.
Pre market buy?
Hard to say, depending what happens overnight.
It could run to 33-35 before the market opens at 9:30. If it does, I wouldn’t panic. Chances are it will trace back to 31-32 or somewhere near the previous close before continuing its move up if that’s the direction it’s going to go. I’d rather wait to confirm and miss part of the move.
Of course, as someone who has twice jumped too early to catch FAZ before it snapped back, I can vouch that it’s not easy to wait when your trigger finger is itching.
This is all my opinion. Your mileage may vary.
would agree with this asessment–have seen the same. also, takes traders 15-30 min. to sort out pre-market anyway. have lost every time when buying early.