The Financials: Current Thoughts.

• it is my belief that the financials will continue to be a tell for the longer term direction of the overall market, with the SP 500 eventually moving in the same direction as the financials, though the financials will be more volatile...
• at this point in time, i believe the there is 35% chance that the FAS, will retest its March 2009 low (around 4.00), sometime by the spring of 2014, and that there is a 65% chance that it will then go on to retest its February 2011 high (around 34.00), 2-4 years after it hits whatever low it puts it....
• i am focusing on swing trading the financials as a means to profit from the above thesis: FAS (triple leveraged long, goes up 3:1 when the underlying securities go up; FAZ (triple leveraged short, goes up 3:1 when the underlying securities go down); the underlying securities are those contained in the Russell 1000 Financial Services Index....
• I believe there will be tremendous opportunities to profitably trade the up and down moves in the financials and that the FAS and the FAZ can facilitate that...these vehicles are not without risk, as they are not really designed for longer term trades, but rather for shorter term trades...but even with these risks, i will be using them for trading purposes, and if they begin to trade significantly out of synch with their underlying index, then i will re-evaluate them as trading vehicles....FAZ and FAS has traded out of synch with the underlying on numerous occasions, so past pivots points appear to have less relevance for present day trading, especially for the FAZ....the XLF could be another useful proxy for financial service company index....

 

Disclosure: Long FAZ.

***remember this is an illustration of what i am trading and my thinking...it is not a recommendation for you or anyone else to buy or sell this or any other security...trade at your own risk...my positions my change at any time without notice***