This is not directed towards longs or shorts no pumping or bashing this is an informative message for anybody trading the FAZ and FAS
The decay and arbitrage have become so immense that investors have to understand that when the FAZ goes down to the now scary price of $6.40 the move back up to $10 requires 3 times more force than before. The move back to $10 would hypothetically be equivalent to $13-14, from the prior bounce up essentially the underlying assets will mostly return to the same individual value when FAZ was $13-14 and now is only
$10.... sounds crazy but it's true
i.e. FAS at S&P 900 in late 08 was trading around $25-$30 and many of the underlying assets have reached the same levels as before if not higher, that should scare anybody long or short out of these ETF'S
they are all doomed eventually, I have spent the last month tracking the arbitrage and mathematical theories behind these which by the way no broker even understands and these are so dangerous to hold onto for anymore than 1-3 days
I can't emphasize that enough!
There is an investigation being launched on Direxion currently from what I've heard and I suggest everybody to be careful in either position.
I sold all my FAZ and SRS on friday due to the developing patterns and uncertainty behind these names the
SRS has managed to fall 80% in 6 months while the index it's supposed to correlate to has also fallen almost 60-80% in that period? SRS is short that index for the record which should be impossible if they're working properly.
You can't figure it out with a basic formula like that. The complex theories are constantly manipulated form premarket and AH trading and Direxion resets these evreyday, you can't track it monthly. It's a daily process and you'll understand if you track evrey half hour close price according to underlying asset value.
the FAS says it all dude..
Look at it's price in the last rally , while the banks had lower valuations then now FAS is worth less than half actually down 60%
Sorry but you don't understand , if it's that easy go call a broker and have them explain it
yes, I heard it's already in the works
The front page of Direxion shares specifically says these are only designed for day trading they should not be held for any period of time? but look at all the people on this board holding?
I'm astonished reading the posts on this board, the lot size people are holding onto the price they think FAZ will go to and the dilusion that these stess tests are going to destroy the market. It's gonna seprate good from bad
the SRS has far more fundamental reasons then the FAZ with commercail real estate dead and everyone is talking about it (front of Barrons)and dividends are being slashed last week, guess what SPG up 11% today! SRS all time new low
The news is in, you have to wait til next quarter for the earnings to bring this market back down huge otherwise we will see only healthy profit taking and buy the dips
Only 10% of my investment are in these inverse etfs, and I hold mainly to minimize volatility. I wouldn't be surprised if the big guys are accumulating FAZ,SRS,etc. so when they allow the market to drop they make money the other way.
agreed 100% with you. Two weeks ago I also lost about $15k due to decay in SRS,
I won't touch leveraged fund again. Even at these "low" prices. Do not buy these funds. They are designed to day trade and if you are wrong you loose and loose big. If you trade these put a stop loss immediately but you will still loose because of stop loss!