Posted on Monday, 13th April 2009 by Cheyne
With Wells Fargo’s positive earnings last week, and earnings reports for JP Morgan, Citigroup and GE coming up in the next fortnight, I expect some very big moves this week in the financials.
I forsee traders will start buying up the above mentioned stocks and take a pretty big gamble that the results will be good, which will see them take some big gains if the news is positive. Obviously we will be back into a bear market if the news isn’t good.
Earnings are due on the 16th and 17th for these companies, and I think during this week we will see the majority of the upwards momentum taking place.
Direxion have two ETFs which are made up of the Russel 1000 financials index which are some of the most actively traded stocks by volume. The tickers are FAZ (short/bear) and FAS (long/bull) and both are triple leveraged and are daily. They both started at 60 and FAZ quickly moved up to a peak of around 110 and FAS fell to about 2.
In the last our weeks FAZ has lost 90% of it’s value due to the market rise and its leverage.
This week I expect to see them cross over on speculation that the upcoming financials earnings will be positive.
This is a pretty big deal, these ETFs are watched closely, once they cross over you will see some FAS movement unlike any of the massive gains we have seen before. And I’m talking big, FAS moved upwards 40% on the Wells Fargo earnings.
FAZ is at $10.78 and FAS is at 8.71. It should be a very interesting week indeed. I would have included a nice chart, but I can’t remember how to make a price overlayed chart use the same price index for both stocks on stockcharts.com so any other chart wouldn’t look pretty.
JP Morgan Chase earnings are due on the 16th and Citi and General Electric are due on the 17th
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