I continue to get e-mails about my thoughts on FAZ & FAS. I have made some nice trades the past couple weeks with them but they are not for the faint of heart. The leveraged ETFs, including the triple-leveraged Direxion variety, are clearly designed for short-term trading, not long-term investing. If you guys are playing with these instruments you should know just how dangerous they are, and with trading volumes exceeding tens of millions of shares a day, they’re clearly being used as trading vehicles. FAZ and other inverse ETF’s are a great way for the amateur investor to play a short position without shorting specific stocks. Direxion says right on its site that the FAZ and FAS are for daily investment goals, not weekly or monthly.
Get trend analysis FREE for FAZ from Ino.com
Get trend analysis FREE for FAS from Ino.com
Now this has been a great trader’s market and anyone not willing to get in and out of these vehicles is passing up a good opportunity to take advantage of market volatility. Please don’t leave your screen with these things because it only takes a couple of words from Geithner or Bernanke and they will turn on a dime. The problem I see with playing these ETF’s is that the biggest moves come in Pre-Market. Most investors are quite aware of the nature of these EFTs certainly by now but I thought it wouldn’t hurt to throw a reminder up once in awhile.
Here are some more ideas of 3x leveraged ETF’s from Direxion.
3X Bull:
ERX – DIREXION SHS ETF TR ENERGY BULL 3X
FAS – DIREXION SHS ETF TR FINL BULL 3X
BGU – DIREXION SHS ETF TR LARGE CAP BULL
TNA – DIREXION SHS ETF TR SM CAP BULL 3X
3x Bear:
ERY – DIREXION SHS ETF TR ENERGY BEAR 3X
FAZ – DIREXION SHS ETF TR FINL BEAR 3X
BGZ – DIREXION SHS ETF TR LARGE CAP BEAR
TZA – DIREXION SHS ETF TR SM CAP BEAR 3X
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