FAZ is down around 9% after hours. Honestly, I'm not too worried. You need to look deeper into the action after hours. Here is what has transpired after hours:
-Stress Test shows that 10 of the 19 largest banks need $75B.
-Bank of America needs $34B
-Wells Fargo is going to issue $6B of new stock
-Citi is raising $5.5B by converting preferred stock to common
-Morgan Stanley plans to raise $5B in capital
-Fifth Third is up 24%
-Citi goes up 7%
-Bank of America up 10%
Meanwhile, FAS is up 9% with its three largest holdings (not counting the Russell 1000 Financial Index) are JP Morgan (up 1.5%) and Wells Fargo (down .77%) and Goldman Sachs (up 1.88%). Bascially, the action in the bank stocks doesn't support the action in the XLF/FAS/FAZ.
But we'll forget about the action in the Financials and look at the broader markets for what is about to come. Let's look at the technical indicators:
-Slow Stochs are both in the 90s (VERY RARE) for the DOW and they have crossed down. The Slow Stochs have gone this high twice in the last 9 months: Mid-November 2008 when thw DOW lost 2,000 points before the slow stochs crossed up and Early-January 2009 when the DOW shed 1,000 points before the slow stochs crossed up.
-The RSI is at 62 and decreasing. It has not been this high since May of 2008 when the DOW was at 13,000.
-We are above the upper Bolling Band. This hasn't happened since the aforementioned November 2008/January 2009 corrections.
-The VIX (fear index)has not been this low since the recession/correction began. The Slow Stochs have crossed up and the chart is below the Lower Bollinger Band.
So what do we see, techincally speaking? The market is historically overbought. It WILL come down. I honestly don't care about what happened with the Stress Test today. The markets are too high and they will come down.
Even if the financials and the markets open up tomorrow, it won't last. There are too many people who have a ton of paper gains who want to sell of- especially going into the weekend.
IMO I see 8,000 by the end of next week. FAZ hopefully to $7
why oh why would ANYONE hold this AH in this environment? I'm a long, or should I say I'm an opportunist..but will play FAZ on the "right" days, key word DAY..bought at 4.83 today sold at 5.71..was hoping for 6.00 but didn't happen...kicked myself for selling at 5.85..got greedy..Friday not the "right" day for FAZ, though I expect to be back soon
Some can continue pumping up the market.
what will happen when billions of new shares getting into market? People may not care because market is still up and up everyday.
But be realistic, the system is still fragile.
If the market is manipulated, do we really care about 2morrow job report? How much longer some can pump the market ? There is no logic now.
Just took my first bite ever on FAZ at 5.17. I bought 50k of UYG at 1.53 and sold it at 2.98 but this is my first experience with the tripples. One question from this 3x newbie: If the financials go up 34% does that mean that Faz will drop 102% (34x3) to below zero? I'm sure this question has been asked many times but many thanks for the assistance.
I see tomorrow starting up and ending down on profit taking and concerns for various reasons.
I will be cashing in. There is no honor amongst thieves.
I'm locking in Profits.
Time to add more retailers to the shit list, long some oil too.
There's not gonna be something that will trigger the correction. It's not gonna be job reports, housing numbers, factory orders, etc
The market is just gonna fall 2% and the media will just blindly attribute the fall to whatever news came out that day. Correlation does not equal causation.
Where do they get a figure of marking 0.50$ on the dollar for the toxic assets? They might be worth $0.00, then what can they say about this $75 Billion deficit? It wouldn't calculate as it would be an infinite number. Putting in a random number like $0.50 just provides a false sense of misbelief that the banks are indeed solvent. They probably are not.