Direxion Daily Financial Bull 3X Shares (NYSE: FAS) — This highly leveraged exchange-traded fund (ETF) seeks to deliver three times the daily performance of the Russell 1000 Financial Services Index. 

After the April high at close to $40, FAS plunged to below its bullish support line before reversing from a double-bottom under $18 in late August. Since then, it has traded in a bull channel with support at around $25.

But on Friday, it rallied following the release of the Fed’s results from its second round of stress tests. The purpose of the tests was to provide a “road map” to allow financial institutions, especially banks, to redistribute capital to shareholders.

Immediately following the stress test results, many banks announced their intentions to raise dividends and, in the case of JPMorgan Chase & Co. (NYSE: JPM) and U.S. Bancorp (NYSE: USB), to do additional share repurchases. Nineteen financial institutions were named and could make big moves higher as a result of the announcement. 

This is a significant development for the financial group and could result in a quick trade in FAS to $35-plus.

Leveraged ETFs like FAS require active, daily monitoring and management, and are not suitable for long-term investors. The SEC warns that returns over longer periods will likely differ in amount and even direction.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.