FAS On Fire After BAC Upgraded To “Buy”
May 18, 2009 @ 3:15 pm
After taking a quick three-day $8,000 profit off the tables back on March 30 shorting financials using FAZ, the triple leveraged short ETF, today’s banking news tells me we were right on by maintaining a contrary position in its longer cousin FAS.
Today’s nearly 18% gain in FAS lifted its performance more than 200% over the past two months, currently trading at $10.31.
Basically Goldman Sachs urging clients to buy Bank of America (BAC) shares with conviction boosted the entire financial sector.
Warren Buffet’s bet on Wells Fargo and US Bancorp and subsequent increase of both companies’ shares during the first quarter lifted the sector as well. Buffett made bullish comments about both banks during Berkshire’s annual meeting in early May.
I still see tremendous upside in the financial sector, possibly continuing its run to the $20 level if the following three events occur: if we experience the restoration of the uptick rule, the SEC eliminates the rampant naked short selling, and more changes are made with respect to the Market to Market rules.
If you took the FAS trade back in March you’ve enjoyed a good ride and remain a good way from our suggested stop loss of $3.50. If you didn’t and are looking to participate, I’m looking for a good entry level around $4.50.
Keep in mind that being a triple leveraged ETF it can move swiftly on the upside and even swifter on the downside. This one needs to be monitored closely.
Your comments are welcome.
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Hi,
I do not understand your comment here:'’If you took the FAS trade back in March you’ve enjoyed a good ride and remain a good way from our suggested stop loss of $3.50. If you didn’t and are looking to participate, I’m looking for a good entry level around $4.50.”
FAS is current trading $8.95 this morning…if you see getting in at $4.50… How?…and if so..would not FAZ still be the play if you see FAS dropping from its current level down to the $4.50 range?
Thanks for any claification…maybe I am just miss reading what you are trying to say. I am current have a couple OCT calls on FAS at $2.50. I am expeting it to go much higher from todays price…and FAZ…lower.
Thanks for your reply in advance.
Best,
Dan
Editor: That was last month’s idea, and it’s done very well. Not sure why you don’t understand. I wouldn’t go into FAZ- this market just won’t give up, and lots of investors keep waiting for a correction that doesn’t seem to want to come. Also, I wouldn’t buy FAS now.
Comment by Dan — 5/28/2009 @ 10:06 am
How come you stopped selling NVLX? Is there something you finally like about it?
Editor: The company simply is not growing as fast as others I am following and going to be following. I probably will eventually sell it all, and move on. Seems like the new management gives investors a better shot, but I believe there’s better small situations out there.
Comment by Anonymous — 5/19/2009 @ 10:04 am