Tag Archives: Direxion Daily Financial Bear 3X Shares

Pressure on Gold May be Buying Opportunity

The Goldman story is affecting gold according to 24/7 Wall Street. On Friday, the SPDR Gold Shares (GLD) lost 2.1% to $111.24. The guys at 24/7 reason that the Paulson & Co. hedge fund implicated in the scandal is heavily invested in gold. However, if investors pull out, the fund may need to sell gold to cash them out, putting downward pressure on the yellow metal. I think this is argument is a nonstarter. Most hedge funds require 60 to 90 days notice before investors can cash out. So, this sell off won’t happen for a while. This means, that gold may have been beaten down without good reason, and that Monday is a buying opportunity.

Meanwhile, The New York Times said on Saturday that Wall Street firms tent to settle cases like this one, but Goldman’s statement on Friday that it intends to fight may create a big problem. While the refusal to settle was intended to discourage investor lawsuits, this could set Goldman up for a long, messy public battle. The paper added that several European banks that lost money in the deal may try to recoup the money from Goldman.

Then Sunday, the Times added two congressmen want a deeper investigation into taxpayer losses while Britain’s prime minister asked his country’s securities regulator to investigate the Goldman due to losses incurred by the Royal Bank of Scotland. Germany added it may take legal action as well.

It appears Yahoo!Finance had it wrong. They didn’t even mention the volume of the Financial Select Sector SPDR (XLF) which was the third most traded stock on Friday with 380.6 million shares traded, topping the SPDR (SPY) and Direxion Daily Financial Bear 3x (FAZ), which it said had the third highest volume. On Friday, XLF fell 3.7% to $16.36 and the ProShares Ultra Financials (UYG), the one that gives 2x the positive return on the financial sector, lost 6.6% to $71.65.

Big ETF Moves on Goldman News

Exciting day on Wall Street as the Securities and Exchange Commission sends a shot across the bow of Goldman Sachs.

The stock market started out mildly higher, when midmorning, the SEC charged Wall Street’s most influential bank with fraud over its marketing of a subprime mortgage product designed to fail. The SEC says a Goldman vice president was also charged with fraud for his responsibility for creating the questionable mortgage product, known as ABACUS. Surprisingly, criminal charges were not filed.

However, this makes many question whether the bull run of the last year is over.

According to Reuters, the SEC alleged that Goldman structured and marketed ABACUS, a synthetic collateralized debt obligation that hinged on the performance of subprime residential mortgage-backed securities. However, Goldman allegedly didn’t tell investors “vital information” about ABACUS, including that the hedge fund Paulson & Co helped choose the securities in the portfolio. Run by John Paulson, the hedge fund made billions of dollars betting that the housing market would crash. The SEC also alleged that Paulson took a short position against the CDO in a bet that its value would fall, reported Reuters. “This included an estimated $1 billion from the transaction detailed in the SEC lawsuit, which the agency said cost other investors more than $1 billion,” said Reuters.

Many people on Wall Street have said this is a politically motivated moved as Congress begins debating reform of financial industry regulation.

Goldman denied the charges. Its stock fell $23.57, or 12.8%, to $160.70, and it brought down the entire market with the Dow Jones Industrial Average losing 126 points, or 1.1% to 11018.66. The S&P 500 dropped 19.5 points, or 1.6%, to 1192.13.

Obviously, this means a lot of movement among ETFs.

The Direxion Daily Financial Bear 3x (FAZ) jumped $1.14, or 10.3%, to $12.18, posting the third-largest volume of the market gainers, 209.7 million shares.

ProShares UltraShort S&P 500 (SDS) gained 94 cents, or 3.3%, to $29.72.

ProShares UltraShort Financials (SKF) jumped $1.15, or 6.8%, to $18.11.

The Financials Select Sector SPDR (XLF) fell 62 cents, or 3.7%, to $16.36.

James Sees Market Testing March Lows

Short ETFs may see a resurgence if Barry James’ prediction comes true.

The Direxion Daily Financial Bear 3X Shares (FAZ), the ProShares UltraShort QQQ (QID) and the ProShares UltraShort Russell 2000 (TWM) were among the top 12 stocks to see the most net cash inflows today according

In a presentation yesterday by mutual funds recently named Lipper Leaders, Barry James, the portfolio manager of the James Balanced Golden Rainbow Fund, says we’re entering a depression.

Lipper, which competes with Morningstar as an evaluator of mutual funds and ETFs, rates funds according to five criteria: total return, consistent return, capital preservation, expenses and tax efficiency. The ratings go from 1 to 5, with 5 being the highest. I’ve attened quite a few of these Lipper Leader presentations over the years and Barry James keeps popping up. Compared to other mutual funds in the same category of balanced funds, those that hold stocks and bonds, the James Balanced Golden Rainbow Fund has scored a 5 in total return, consistent return and capital preservation for all the measured periods: the three-years ended March 31, the five-year period, the ten-year period and lifetime of the fund.

James makes the top of the class by properly evaluating the risk in the market. So, he’s worth listening to. He thinks the economy is heading into a depression. He comes to this conclusion because businesses have cut inventories, but he doesn’t see any increases in production. Restaurants at resorts are seeing declining business. He thinks the economy remains weak, which will lead to a weakened stock market. James expects the market to test the March low.

He said the recent rally has been a short covering rally. More than growth or value driving the market, he said the rally has been based on “silly cheap stocks. In terms of quality, poor, or low-quality stocks have been running rather than growth or value stocks.
to the Wall Street Journal.