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Astounding volume in 3x financial ETF (FAS) may signal turnaround
Topics: macro, trade ideasToday, the Dimension 3X Financial Bull ETF (NYSE:FAS) traded nearly 300M shares. That’s pretty amazing for an instrument that didn’t even exist a year ago. Forgive the style drift — I know its hardly a microcap. Though net assets are down to $320M (per Yahoo!), the ETF attempts to replicate on a leveraged basis the daily movements of much bigger stocks.
That said, I don’t think this market will turn until the FAS — which Ron Sen aptly named the crack cocaine of financial stocks — heads north. I’m a buyer here and believe that a short-term reprieve will come this week or next.
This is just an attempt to get in front of a snapback rally, not an endorsement of lasting recovery at our nation’s ailing banks. There are three potential catalysts: 1. the severity of the oversold condition; 2. this Thursday’s hearing on mark-to-markets, the lifting of which many think will aid bank stocks; and 3. options expiration.
The first catalyst (the oversold condition) is most compelling. When a stock trades at such massive volume and can’t go down even in the face of negative prints on the major indeces, there is a pretty good chance the sellers are ready for a break. That’s my bet anyways, and we’ll find out as the week progresses whether it works.
Get trend analysis for FAS from Ino.com
DISCLOSURE: long FAS
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Miguel Barbosa
Founder Of: SimoleonSense.com
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