Posts for Ticker ‘FAZ’

Top Financial Earnings on Deck (JPM, GS, C, BAC, PRSP, FAS, FAZ)

Money ImageThis week is the week we have 6 DJIA components reporting earnings as the first real week of earnings season, but the big financial stocks reporting will set the tone for how the rest of the financial sector’s earnings are going to be received.  In banking we have the cleanest bank in JPMorgan Chase & Co. (NYSE: JPM) reporting and the cleanest brokerage firm, ergo bank holding company with no bank, in Goldman Sachs Group Inc. (NYSE: GS).  We also have Citigroup Inc. (NYSE: C) on Thursday and Bank of America Corporation (NYSE: BAC).  While Prosperity Bancshares Inc. (NASDAQ: PRSP) is far from any national leadership bank, it is deemed by the investment community as one of the cleanest regional banks out there and its earnings are due Friday morning.

These earnings also going to have a direct impact each day in the trading of the highly volatile Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and Direxion Daily Financial Bear 3X Shares (NYSE: FAZ).  Be advised that Direxion has been making its own disclosures that these triple-leverage ETFs target effective moves during the trading session rather than how they trade through time and from closing bell to opening bell the next day.  Our take is that you could easily see double-digit percentage moves in these two ETFs on Wednesday, Thursday, or Friday because of the sector volatility.

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Posted on: October 13, 2009 – 2:03 pm in Banking, Brokerage Firms, Buffett, Calendar, ETF, Earnings, Financial Stocks, , , , , , ,

Inverse-Leverage ETFs Regain Favor As S&P Breaks 1,000 (FAZ, SKF, SDS, DUG, SRS)

Bull and Bear ImageIt was just last week that the DJIA was on its eighth consecutive day of a rally and the junkiest of companies were running rampant.  But as the economic numbers started to finally bring in some growth, you finally started to see sellers come into play.  And now suddenly with a triple-digit drop in the DJIA comes the sound of concern from many wondering if we ran too far and too fast.  We did run too far and too fast and the moves started to price in probably what is a return to normal growth rather than muted growth.  And just like that, the interest in inverse exchange-traded funds is back.

Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) is probably the biggest go-to instrument for traders betting against the market because it offers triple-leverage in a bet against the financial stocks in the Russell 1000 Financial Services Index.  At 1:30 we have seen over 65 million shares trade hands and this 3X-leverage inverse ETF is up 10% at $25.55.  Average volume on most days is about 40 million, and now anyone who bought this one in the last 7 trading days is up.
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Posted on: September 1, 2009 – 1:52 pm in ETF, Index, , , , ,

ETFs/ETNs Becoming Hybrid Closed-End Funds (USO, UNG, DBO, DXO, GAZ, GSG, GS, MS, GLD, SLV, JJC, FAS, FAZ)

Two months ago it was a carnal sin to suggest that certain exchange-traded funds or notes which track commodities would start trading more like a closed-end fund based upon supply and demand moves in shares caused by in-flows and out-flows of orders rather than solely by the direction of the prices of underlying commodities.  It has been our ongoing prediction that many commodity ETF/ETN products (and maybe some leveraged products as well) will become more like closed-end funds. Yet here under new regulations that have not even become gospel, we have seen new share issuances either denied or withdrawn from some of these ETF or ETN products.  And we are getting to see a premium in pricing to boot.  The United States Natural Gas Fund LP (NYSE: UNG) is the most classic example out there.  This ETN was at a 15% to 16% premium to the actual gas futures as investors are choosing to pay higher prices just for the ability to get exposure in the portfolio in case these prices rise.  The UNG has already confirmed that no new shares would be issued currently, and it is now so large that it controls closed to 20% of the benchmark natural gas contracts.  Limitations of this sort will drive a free-market theorist nuts, but the other reality is that this can also create large directional price moves that have nothing at all to do with fundamentals.

It turns out that the PowerShares DB Oil Fund (NYSE: DBO) traded about 0.3% higher than its actual value in crude futures late last week, and limits to shares could exaggerate premiums and discounts.  And the PowerShares DB Crude Oil Double Long Exchange-Trade Note (NYSE: DXO) has also suspended issuing new shares. Barclays has also said that it would, at least temporarily, suspend new shares from being issued in its natural gas ETN called the iPath Dow Jones-AIG Natural Gas Subindex Total Return Exchange-Traded Notes (NYSE: GAZ).

Barclays also said that it would stop issuing new shares of the iShares S&P GSCI Commodity Index Trust (NYSE: GSG) once the outstanding amount reached 55.9 million shares. If our data is accurate on the latest count, that looks to stand at roughly 52 million shares.  This is a semi-diversified product that tracks about 24 different commodities in energy, agriculture, industrial metals, prcious metals and livestock.  It is energy dominant, but this was a much more diversified fund that decided to limit its size.  This one also has traded at a premium to its underlying value.
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Posted on: August 24, 2009 – 11:30 am in Commodities, ETF, Metals, Oil & Gas, Regulation, , , , , , , , , , , , ,

More Official Warnings on Leveraged ETFs (FAS, FAZ, UYG, SKF, SDS, SSO)

money-stack-imageThe Financial Industry Regulatory Authority and the Securities and Exchange Commission decided to issue an Investor Alert yesterday called “Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors”….  This warning was meant to warn retail investors of the added risks in leveraged ETF investments that exist above and beyond the traditional world of investment products. This follows a recent FINRA regulatory notice reminding securities firms and brokers of their sales practice obligations relating to leveraged and inverse exchange-traded funds.

While this is not against any single leveraged ETF (or inverse ETF), it may have at least some influence on leveraged ETF and reverse-leveraged ETFs.  The two key ETFs for leverage and high volume and high volatility are the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) as they are the triple-leverage financial sector ETFs.

A handful of the other active leveraged and inverse-leverage ETFSs are as follows: Ultra Financials ProShares (NYSE: UYG) seeks twice the daily performance of the Dow Jones U.S. Financials index.  UltraShort Financials ProShares (NYSE: SKF) seeks twice the inverse of the daily performance of the Dow Jones U.S. Financials index. UltraShort S&P500 ProShares (NYSE: SDS) seeks twice the inverse of the daily performance of the S&P 500 Index. Ultra S&P500 ProShares (NYSE: SSO) twice the daily performance of the S&P 500 Index.
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Posted on: August 19, 2009 – 9:49 am in ETF, Index, Regulation, SEC, Trading Alert, , , , , ,

Brokerage Giant Restricts Leveraged and Inverse ETF Products (FAS, FAZ, UYG, SKF, SDS, SSO)

The movement against, or at least a move to better quantify, leveraged ETFs is still going.  In fact, it is becoming more clear.  While this is not against any single leveraged ETF (or inverse ETF), this does have at least have a continued influence on leveraged ETF and reverse-leveraged ETFs such as the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ).  Those are triple-leverage financial sector ETFs. A handful of the other active leveraged and inverse-leverage ETFSs are as follows: Ultra Financials ProShares (NYSE: UYG) seeks twice the daily performance of the Dow Jones U.S. Financials index.  UltraShort Financials ProShares (NYSE: SKF) seeks twice the inverse of the daily performance of the Dow Jones U.S. Financials index. UltraShort S&P500 ProShares (NYSE: SDS) seeks twice the inverse of the daily performance of the S&P 500 index. Ultra S&P500 ProShares (NYSE: SSO) twice the daily performance of the S&P 500 index.

This morning came an announcement from Morgan Stanley Smith Barney that it has placed certain restrictions on the sale of leveraged, inverse, and leveraged inverse exchange traded funds.  The reason even started out as “In response to concerns raised by regulators about these securities…”
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Posted on: August 7, 2009 – 1:32 pm in Brokerage Firms, ETF, Regulation, , , , , ,

Mass. Inquiry on Leveraged ETF’s (FAS, FAZ, UYG, SKF, SDS, SSO)

There may be some misconceptions out in the market over an inquiry into the leveraged ETF universe.  The Massachusetts Secretary of State has inquired into the sales, marketing, and disclosure practices of leveraged ETF’s.  This issue will bring more attentionon some top volume leveraged-ETFs.  The two most active before the reverse splits were the Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) in the triple-leverage.  Others are as follows:

Ultra Financials ProShares (NYSE: UYG) seeks twice the daily performance of the Dow Jones U.S. Financials index.  UltraShort Financials ProShares (NYSE: SKF) seeks twice the inverse of the daily performance of the Dow Jones U.S. Financials index. UltraShort S&P500 ProShares (NYSE: SDS) seeks twice the inverse of the daily performance of the S&P 500 index. Ultra S&P500 ProShares (NYSE: SSO) twice the daily performance of the S&P 500 index.

There are many other issues from leveraged ETF families out there.  These are just some of the top leveraged exchange traded funds by trading volume.  But there are some considerations here that are a part of the Mass. Secretary of State inquiry.
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Posted on: July 15, 2009 – 2:00 pm in ETF, Law, Regulation, , , , , ,

ETF Reverse Splits Have Arrived… More Looming? (FAS, FAZ)

Broken Money Merger ImageWhen we first floated the notion that Direxion may need to consider conducting a reverse stock split on its two Triple-Leverage cult ETFs for the financial sector, this was a notion that was not that popular despite the company’s hint that a reverse split was likely before the market temporarily interrupted that need.  Now this morning we are seeing the Direxion Financial Bull 3X Shares (NYSE: FAS) and the Direxion Financial Bear 3X Shares (NYSE: FAZ) have adjusted prices to be based around reverse splits.  It is the ex-date.
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Posted on: July 9, 2009 – 7:23 am in Banking, ETF, Financial Stocks, Stock Splits, Trading Alert, ,

Quantifying Triple Leverage ETF Performance vs. Target Index (FAS, FAZ, BGU, BGZ, ERX, ERY)

Burning Money PicMoney Stack ImageDirexion has issued its semi-annual report for its triple leverage ETF holders and there are some interesting revelations here.  While there are many others covered, we wanted to demonstrate some of the differences among the Direxion Daily Financial Bull 3X Shares (NYSE: FAS), Direxion Daily Financial Bear 3X Shares (NYSE: FAZ), Direxion Daily Large Cap Bull 3X Shares (NYSE: BGU), Direxion Daily Large Cap Bear 3X Shares (NYSE: BGZ), Direxion Daily Energy Bull 3X Shares (NYSE: ERX), and the Direxion Daily Energy Bear 3X Shares (NYSE: ERY).
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Posted on: July 7, 2009 – 10:04 am in ETF, Index, Mutual Funds, Stock Splits, Trading Alert, , , , , ,

More Triple-Leverage ETF Competition (UPRO, SPXU, FAS, FAZ)

Money Stack ImageProShares already has double leverage ETFs for investors and traders alike.  It now has launched two new Triple-Leverage ETFs.  The UltraPro S&P500 (NYSE: UPRO) is meant to offer 300% of the daily return for the S&P 500 Index.  The UltraPro Short S&P500 (NYSE: SPXU) is meant to offer the 300% inverse of the daily return of S&P 500 Index.  While these are not exactly the same as Direxion’s Triple-Leverage ETF’s, they are meant as competition to the 20 Triple-Leverage ETFs run by Direxion.

The Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and the Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) track the Russell 1000 Financial Services Index rather than the S&P 500 Index.  But with the two offsetting funds from Direxion frequently trading 450 million shares combined on many trading days  and with the SPDRs (NYSE: SPY) trading over 250 million shares on most days, it is not hard to imagine why ProShares wants to launch these.
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Posted on: June 25, 2009 – 2:15 pm in ETF, Index, , , ,

More Reverse Splits, or Just Closure, Possible or Needed in ETFs (FAS, FAZ, UYG, BAC, BHH, ARBA, IIH, AKAM, VRSN, UNG, USO, GLD, SDS, SPY, NYX, NDAQ)

Money Stack ImageWe have been large fans of exchange-traded funds, exchange-traded notes, and other exchange-traded instruments which are open for trade throughout the day that are allowed to be invested in just like a stock.  But with all new and growing markets, there are risks that need to be kept in check.  There are some leveraged ETF’s and their inverse counterparts which might need to see reverse share splits in the near future.  The notion of so many low-priced shares being so active may wreak havoc as the funds managing each ETF try to keep up with appropriate derivatives and in buying and selling shares of the components that are supposed to be the underlying securities.  There are even a few ETF’s which should probably just be closed down entirely and liquidated to holders.  Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and The Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) are both prime examples of ETFs which skew total daily exchange trading volume numbers because of low share prices today and massive trading volume.  This is not meant to pick on the fund groups because they created trading vehicles which they did not expect to see some of these moves.  There are many more ETFs and ETNs to consider here.

Direxion just announced a reverse split for another ETF yesterday, but not its two financial triple-leverage ETFs.  Direxion Daily Financial Bull 3X Shares (NYSE: FAS) is now back down close to $8.00 per share, yet it trades 250 million shares on an average day.  The Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) is barely above $5.00 and trades more than 200 million shares on an average day.  So between the FAS and FAZ, you have an average of more than 450 million shares, and at today’s prices that is close to $3 billion worth of nominal value.

This review discusses a portion of the ETFs and ETNs and the ones under discussion today, along with underlying key companies, are Ultra Financials ProShares (NYSE: UYG), Bank of America Corporation (NYSE: BAC), B2B Internet HOLDRs (AMEX: BHH), Ariba, Inc. (NASDAQ: ARBA), Internet Capital Group (NASDAQ: ICGE), Internet Infrastructure HOLDRs (AMEX: IIH), VeriSign Inc. (NASDAQ: VRSN), Akamai Technologies Inc. (NASDAQ: AKAM), United States Natural Gas (NYSE: UNG), United States Oil (NYSE: USO), SPDR Gold Shares (NYSE: GLD), UltraShort S&P500 ProShares (NYSE: SDS), SPDRs (NYSE: SPY), New York Stock Exchange (NYSE: NYX) and the NASDAQ OMX Group Inc. (NASDAQ: NDAQ).
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Posted on: June 23, 2009 – 12:42 pm in Banking, Commodities, ETF, Index, Oil & Gas, Trading Alert, , , , , , , , , , , , , , , ,

Leveraged ETF’s Weigh Bank Preferred Redemptions (FAS, FAZ, UYG, SKF, PGF, BAC, JPM, WFC, GS, C)

The triple-leverage financial ETFs of Direxion Daily Financial Bull 3X Shares (NYSE: FAS) and Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) are getting to deal with yet another potential wrench in the machine: preferred share redemptions from major banks.  This will also pose a potential issue for the Ultra Financials ProShares (NYSE: UYG) and the UltraShort Financials ProShares (NYSE: SKF) ETFs that trade at double-leverage of the Dow Jones U.S. Financials index.

The PowerShares Financial Preferred (NYSE: PGF) is the ETF that specifically tracks the preferred shares of financial stocks.  This can also be impacted, although we would note that this ETF here has five of its top ten holdings which are European bank preferred shares and the top ten holdings are over half of the ETF.

This comes on the hells of this morning’s Bank of America Corporation (NYSE: BAC) announcement that it was offering a tender exchange offer on nine of its preferred series for up to 200 million shares of common stock.  At today’s prices, that would represent more than $2.2 billion in new common stock.  The largest US bank holding company issuers we have seen with Bank of America are JPMorgan Chase & Co. (NYSE: JPM), Wells Fargo & Co. (NYSE: WFC), and Goldman Sachs Group Inc. (NYSE: GS).

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Posted on: May 28, 2009 – 11:27 am in Banking, Bonds, Brokerage Firms, ETF, Financial Stocks, Trading Alert, , , , , , , , , ,

Winning Stocks on a Down Week (ADY, BCRX, DDRX, DGI, FAZ, LORL, RHT, WX)

This was a week of profit taking and a probable realization that a move of 30% and more from the lows in March was probably a bit much in the face of only consistent “less-bad” economic data.  But as every optimist says, “There is always a bull market somewhere.”  We saw a drop of  about -3.6% to 8,268.64, while the S&P 500 Index slid by -4.% to 882.88.  The NASDAQ was the ‘better’ of the losers with a drop of -3.4% to 1,680.14.  But there are many standout stocks, and some of the key big movers and winners this week were American Dairy Inc. (NYSE: ADY), Biocryst Pharmaceuticals Inc. (NASDAQ: BCRX), Diedrich Coffee Inc. (NASDAQ: DDRX), DigitalGlobe, Inc. (NYSE: DGI), Direxion Daily Financial Bear 3X Shares (NYSE: FAZ), Loral Space & Communications, Inc. (NASDAQ: LORL), Red Hat Inc. (NYSE: RHT) and WuXi PharmaTech Inc. (NYSE: WX).

Believe it or not, some of these are up exponentially off of the lows.  One is up 30-fold from the end of March, and amazingly the best winners were not in tech or biotech.  We have provided a weekly synopsis and the reason for their from the lows.
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Posted on: May 16, 2009 – 8:10 am in HI/LOW, The Week, Trading Alert, Turnarounds, , , , , , , ,

FAS/FAZ Dealing With Billions of Dollars of Securities Sales from Members (FAS, FAZ, BBT, COF, PFG, WFC, USB)

Money Stack ImageThe triple leverage ETF’s, the Direxion Financial Bull 3X Shares (NYSE: FAS) and Direxion Financial Bear 3X Shares (NYSE: FAZ), are perhaps the most volatile of all financial-stock ETF’s.  This morning they are getting to deal with a wave of secondary offerings and capital offerings from constituent member banks and financial firms.  These ETF’s are reacting to major “raising cash” filings and offerings from BB&T Corp. (NYSE: BBT), Capital One Financial Corp. (NYSE: COF), Principal Financial Group Inc. (NYSE: PFG), Wells Fargo & Co. (NYSE: WFC), and US Bancorp (NYSE: USB).
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Posted on: May 11, 2009 – 8:50 am in Banking, Dividend, ETF, Financial Stocks, Secondary Offering, , , , , , ,

Financials & Direxion 3X Bulls, Recent Highs (FAS, FAZ, JPM, BAC, GS, WFC)

money-stack-image6To call the triple-leverage financial ETF of the Direxion Financial Bull 3X Shares (NYSE: FAS) volatile would be the understatement of the year.  It has become the day trading instrument of choice for those who trade financial stocks because it has such a low share price and because its triple-leverage adds that much more volatility.  What is interesting is that this  ETF is not just a bank ETF as it tracks the Russell 1000 Financial Services Index.  While it aims to diversify to all financial firms in that index with more than 200 components last year, it looks like the four top dogs of JP MORGAN CHASE & CO. (NYSE: JPM), BANK OF AMERICA CORP. (NYSE: BAC), GOLDMAN SACHS GROUP (NYSE: GS), and WELLS FARGO & CO (NYSE: WFC) may now more than 20% of the weighting.
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Posted on: May 6, 2009 – 10:00 am in Banking, ETF, Financial Stocks, HI/LOW, Trading Alert, , , , , ,

Direxion Launches FAS/FAZ-Like ETFs For T-Bonds (FAS, FAZ, TYD, TYO, TMF, TMV)

money-stack-image37Direxion is at it again with triple-leverage ETFs.  If you love trading the financial stocks for triple leverage via the Direxion Financial Bull 3X Shares (NYSE: FAS) or shorting them with triple leverage via the Direxion Financial Bear 3X Shares (NYSE: FAZ), then you have some new trading vehicles to use for bonds.  You can now be long or short the US 10-Year or US 30-Year Treasury Bonds.

Direxion Daily 10-Year Treasury Bull 3X Shares (NYSE: TYD)
Direxion Daily 10-Year Treasury Bear 3X Shares (NYSE: TYO)
Direxion Daily 30-Year Treasury Bull 3X Shares (NYSE: TMF)
Direxion Daily 30-Year Treasury Bear 3X Shares (NYSE: TMV)

These were all very thinly traded so far, but they are probably unknown to almost everyone.  It will be interesting to see how these trade once the FOMC does not have its near-Zero rate policy on the short end of the curve and when there is a big economic number move.

Jon C. Ogg

Posted on: April 16, 2009 – 5:29 pm in Bonds, ETF, Economy, IPOs, , , , , ,

Would Direxion Financial Bull 3X Consider Reverse Split? (FAS, FAZ)

broken-money-merger-image2Day traders, ETF investors, hedgers, swing traders, and more have been using the Direxion financial leveraged ETF’s as their go-to trades in the financial sector.

Direxion Financial Bull 3X Shares (NYSE: FAS) is the triple-bullish leverage ETF for financials, and the Direxion Financial Bear 3X Shares (NYSE: FAZ) is the triple-bearish leveraged ETF for financials.  These funds have only been trading since November 2008, but in order to curb some of the price parameters and the volatility of these ETFs, we wonder whether they WOULD THEY CONSIDER A REVERSE SPLIT?
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Posted on: March 13, 2009 – 2:53 pm in Banking, ETF, Financial Stocks, Stock Splits, ,

The FAS and FAZ Make Stock Market Volatility Look Like Child’s Play

Since Monday, when several news items (1. Citigroup (NYSE: C) said it would be profitable, 2. Fed Chairman Bernanke addressed mark-to-market issues, and 3. Barney Frank said he expects to see the uptick rule back sometime within a month) sparked a rally in financials, volatility in two 3x leveraged ETF’s has been off-the-charts. The Financial Bull 3x (NYSE: FAS) and Financial Bear 3x (NYSE: FAZ), two fairly new ETF’s, have had double-digit percentage moves in 2 of the last 4 trading days.

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Posted on: March 13, 2009 – 8:32 am in Uncategorized, , ,