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Direxion Daily Financial Bear 3X ETF Message Board

  • sorealman sorealman May 9, 2009 1:52 PM Flag

    Get ready for Black Monday

    Now that the banks have run up their shares and completed their secondaries, it's time for a massive sell off. Too much news out there now to put the fear into people. Fear will drive this down lower than March 9. FAZ will be back to 100 on July 10.

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    • faz is going lower,look at the friday trends the last several weeks,
      when banks tanked on mondays faz jumped during the last 20 minutes of the session on that friday prior.that did not happen this friday.

      this whole crooked wall street market of 2009 is run a bs computer program.
      bad news, banks go up, good news banks go up.

    • it won't go to 100, ever again unlessthey do a reverse split.

    • $38-40 HIGHEST SHE CAN FLY. LET'S HIT $2.5 FIRST.

    • I disagree. Monday won't be that bad. I think they'll suck in a couple more "longs" on Monday morning, then sell off after by lunch time. World markets down Tuesday and we will go down hard on Tuesday and Wednesday of this week. I think we should be back to around 8029-8130 by the end of the week.


      But hey, if you are right with a lower low than March 9th by the end of the week I'm fine with that. I just loaded up yesterday late in the afternoon on Puts for May and June. That is Puts for "bullish" symbols and Calls for "bearish" ones like FAZ.

      If you look at the Dow, and not that I think this is the best indicator of the economy but people do look up to it more so than other indices. IBM is roughly 9% of that composite. IBM came down and is now fighting at the 100 level. If it breaks the psychology of IBM holders can change very quickly. In addition to that, the days of the financials 5-10% up days are running out. So BAC and C that make up around 2% of the Dow will no longer be as supportive. I think they will come down into options expiration and American Express that weighs over 2% on the Dow is approaching resistance at 30 and will most likely turn around as well as it is beyond overbought. Then we have Exxon and Chevron making up a combined 13% of the Dow. It looks to me like both are about to be topped out as well. So in summary, the overall market psychology could turn very quickly this week once the Dow has a 2-4% down day.

      If you look at October 19, 1987, the Black Monday wasn't just a one day sell off but a continuation of the previous weeks' trend. I assume options exp. was on the third week that friday which would have been October 16th. I can't see such an event happening this Monday. If it were to happen then I think it were more likely to happen next Monday after a "bad" week during which people realize that we aren't going just up from here. But I don't think that would happen yet, wait for the fall for Q3 numbers....

    • FITB is up in AH. So is C and BAC. I hold a position in FAZ and I'm concerned I won't see any gains on Monday. Lets see what happens premarket on Monday.

    • You're not so good at math, are you?

      How do you figure FAZ will get to 100 by July 10? Is that based on anything even purporting to resembling analysis, or are you just throwing out some arbitrary price target, assuming that if it was at 100 two months ago then it must be able to "somehow" get back there two months from now, without any understanding of how a leveraged ETF works? That's a rhetorical question, BTW. The answer, of course, is the latter.

      The most favorable case for a leveraged ETF is a continuous trend in a favorable direction; lots of up and down volatility hurts it. If I'm not mistaken, there are 43 trading days between now and July 10. So, let's take a look at the most favorable hypothetical scenarios, shall we?

      -> If RIFIN goes down exactly 1% each day for 43 days, the price ends up at 15.12, so that doesn't work.

      -> If RIFIN goes down exactly 2% each day for 43 days (we're talking an 86% drop in just two months, all in small increments with no big crashes, mind you), FAZ goes to 49.06, so that doesn't work either.

      -> If RIFIN goes down 2.5% each day for 40 consecutive days all the way down to 0 (i.e. ALL the major bank stocks become worthless but only in a steady stream of small increments with no major panics), FAZ goes to 81.20, so even that doesn't work.

      -> If RIFIN goes down 4% each day for 25 days all the way down to 0, FAZ goes to 76.50, and at 5% for 20 days it goes to 73.65, so as you can see higher percentages in a shorter path to 0 are *less* favorable, not more favorable.

      -> Try some test cases and you'll see that an uneven path, e.g. an average of 3% down each day, but one day it's 1%, the next day 5%, the next day 2%, the next day 4% is *less* favorable than 3% per day (in the first case, it gains 40.6% in 4 days, and in the second it gains 41.2 in 4 days).

      The most favorable case for FAZ, therefore, is RIFIN going down to 0 in 43 days in even daily increments of 2.3255%, which would put FAZ at 81.77, so even in the ridiculously unrealistic most favorable case, it's mathematically impossible for FAZ to get to 100 in 43 days, and that's not even counting margin interest and management fees!

      The most favorable case not limited to 43 days is RIFIN down 1.25% for 80 days, for an 85.56 price for FAZ, the theoretical maximum that FAZ can ever reach without a reverse split (again not accounting for interest and fees).

      To get a better idea of what's realistic, you're better off taking a look at real world examples from previous sell-offs in financials, and you'll see that FAZ can easily double or triple. I wouldn't rule out quadrupling from here if reality catches up to financials and they go to new lows from the top of this run-up but remaining bullishness keeps the pace of the meltdown moderate, but that's about the best you can hope for.

      So get your head out of your ass, will ya? You shouldn't be trading something you have this little understanding of.

      • 2 Replies to hedgehog25
      • FAIL AT COMPOUNDING AND EXPONENTIAL GROWTH

      • Your calculations or estimates for RIFIN are all wrong. You also did count complicated cases with more compound erors of down-up-down etc. Otherwise, how can FAZ reached 200 (RIFIN is higher in this case) and 100 (RIFIN is lower in this case) in the past?

        "> If RIFIN goes down exactly 1% each day for 43 days, the price ends up at 15.12, so that doesn't work." For RIFIN: 64.9% of current level, for FAZ: 3.56 fold X 4.49 = 16

        "-> If RIFIN goes down exactly 2% each day for 43 days (we're talking an 86% drop in just two months, all in small increments with no big crashes, mind you), FAZ goes to 49.06, so that doesn't work either." For RIFIN: 41.9 % of current level, for FAZ: 12.25 fold X 4.49 = 55

        "-> If RIFIN goes down 2.5% each day for 40 consecutive days all the way down to 0 (i.e. ALL the major bank stocks become worthless but only in a steady stream of small increments with no major panics), FAZ goes to 81.20, so even that doesn't work." For RIFIN: 36.32 % of current level, for FAZ: 18.04 fold X 4.49 = 81.02

        "-> If RIFIN goes down 4% each day for 25 days all the way down to 0, FAZ goes to 76.50, and at 5% for 20 days it goes to 73.65, so as you can see higher percentages in a shorter path to 0 are *less* favorable, not more favorable." For RIFIN: 36% of current level, for FAZ: 17 fold X 4.49 = 76.33

        -> Try some test cases and you'll see that an uneven path, e.g. an average of 3% down each day, but one day it's 1%, the next day 5%, the next day 2%, the next day 4% is *less* favorable than 3% per day (in the first case, it gains 40.6% in 4 days, and in the second it gains 41.2 in 4 days).

    • This is the 8th consecutive call for a BLACK MONDAY. Sound like a frickin broken record. Also sounds like you've lost your azz!! LMAO - loser.

    • You are too funny. This BULL market is just getting its legs....Thanks for owning FAZ

    • Awesome prediction. You are certainly a market genius. I will buy lots of FAZ based on your opinion. I will hold them and "be patient" like the rest of the fools underwater.

    • i wish.

      but is option expiry week, and if most shorts have covered.....well, fasten your seatbelts...

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FAZ
17.09+0.37(+2.21%)Oct 22 4:00 PMEDT

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