Direxion Daily Financial Bear 3X Shares (NYSE: FAZ) – This ETF seeks daily investment results, before fees and expenses, of 300% of the inverse of price performance of the Russell 1000 Financial Services index. The fund normally creates short positions by investing at least 80% of net assets in financial instruments that, in combination, provide leveraged and unleveraged exposure to the index.
FAZ has been consolidating in a downward channel following a low in late April at $10.80. The recent reversal on September 21 and yesterday’s buy signal from the stochastic may have formed a double bottom with that April low. And a pop above the 50-day moving average now at $12.51 would signal that a run to $14 and even $17 could occur.
But leveraged and inverse ETFs entail unique risks, including but not limited to: use of leverage; aggressive and complex investment techniques; and use of derivatives. Leveraged ETFs seek to deliver multiples of the performance of a benchmark. Inverse ETFs seek to deliver the opposite of the performance of a benchmark. Returns over longer periods will likely differ in amount and even direction. These products require active monitoring and management, as frequently as daily. They are not suitable for all investors. Stop-loss orders should be used to protect against losses.
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