FAZ update - is a major spike imminent?...

originally published June 15th, 2009

It is understood that many of you are probably sick of hearing about this one, especially those of you who responded to the first article on it and bought too early. However, for those of you who can stomach it, there is very good news - for FAZ actually broke out of its curved downtrend today, FOR THE FIRST TIME SINCE IT STARTED TO DROP FROM ITS MARCH HIGH AT ABOUT $110. It is true that the break is thus far marginal and on light volume, and therefore at this stage unconvincing, but nevertheless it could mark the start of the dramatic spike that we have been angling for all along. For anyone contemplating taking a position the thing to look for is the first big up day on heavy turnover that breaks volume out of its current downtrend. If this happens you should look to jump in about half an hour before the close, for it is likely to be followed by an accelerating ramp. The reason for such a ramp would be of course be the broad market and financial stocks finding themselves in an accelerating downtrend. The exact same reasoning applies to SKF (Proshares Ultrashort Financials), which made a similar move to FAZ today.

IMPORTANT NOTE: leveraged ETFs such as this are only suitable for experienced subscribers who understand the risks involved. As their performance is magnified by the use of options they have a high "decay rate" in the event that the sector they are based on does not perform as expected. That said, the downside risk in FAZ has now been greatly reduced due to the fact that it has dropped so much in recent months.

Direxion Daily Financial Bear 3 X Shares, FAZ, closed at $4.68 on 15th June 09.