These 4 ETFs Could Be In For A Wild Ride (FAZ, VXX, TLT, GLD)
“The S&P 500 chart shows a massive head-and-shoulder top that’s formed over the last eight months, left-shoulder head right-shoulder. The last rally failed right at the declining topsline and 50-day moving average, rolled over hard, accelerating today down 3.11% or 33.42 on the SPX alone to 1041 with a low at 1035. That area is right at the low that it reached in May and early June, also going back to last year as well. So, there’s a massive neckline on a head-and-shoulder’s pattern at this point. Any further downside damage, it could easily slip down under 1000 to the 989-90 zone, even 970 short-term. Outside that, possibly, a quick hit down to 950, if it really accelerates. That’s what we’ll have to keep an eye on when looking at some of the individual market leaders and how critical they are at this point and time,” Harry Boxer Reports From Advice Trade.
Boxer goes on to say, “The Direxion Daily Financial Bear 3X Shares ETF (NYSE:FAZ) also appears to be potentially basing. Triple top up around 18 may be tested as early as tomorrow. If that is the case and it breaks out on heavy volume, you could see it run up to the 20 area, and then as high as 22 1/2 – 23.”
“The IPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX), one of my favorites, had a huge move in April and May. I anticipate another move that could take place if the stock breaks out around the 27 – 30 level. Up 2.60 or 9.23% on 35 million shares today. It looks like acceleration’s taking place. Targets at 35-6 zone, and should lead to something up around 40,” Boxer Reports.
Considering the price points that Harry Boxer is anticipating and looking at the markets with so much uncertainty these guys put it perfectly.
“Right now we are at one of those crucial macro inflection points in which everyone must focus on the bigger picture risks and understand the context within which this market is moving around. With the talk about fiscal austerity in the Eurozone, contagion in the US and financial reform at home, there are considerable obstacles to short-term strength in equities. This requires a multi-pronged approach. In times like these, our first priority is to protect and preserve capital,” Wall Street Cheat Sheet Reports.
They go on to say, “When markets go down aggressively, correlation tends to be very high. This means that just about all assets (these days all assets across the globe) move in harmony in the same direction. Diversity in a time of panic markets does not protect investors from losses. That does not mean that investors should completely cut exposure to equities, but rather, it means buying some form of portfolio protection–whether that be a negatively correlated instrument, such an inverse ETF such as The Direxion Daily Financial Bear 3X ETF (NYSE:FAZ), SPDR Gold ETF (NYSE:GLD), or iShares Barclays 20+ Year Treas Bond ETF (NYSE:TLT)–or outright shorting a weak stock.”
“Panic markets also provide the opportunity to start SLOWLY accumulating fundamentally strong companies, companies with good relative strength and companies whose strengths or weaknesses are independent of the broader economy’s strengths or weaknesses,” Wall Street Cheat Sheet Reports.
We have put together some more details on all the ETFs mentioned in the article below. Visit our categories for each respective ETF for more insight.
Direxion Daily Financial Bear 3X Shares ETF (NYSE:FAZ) Visit Our FAZ Category: HERE
The investment seeks to replicate, net of expenses, 300% of the inverse daily performance of the Russell 1000 Financial Services Index The fund will invest at least 80% of assets in securities that comprise the index. It will also utilize financial instruments that, in combination, provide leveraged and unleveraged exposure to the index. The fund is nondiversified.
IPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX) Visit Our VXX Category: HERE
The investment seeks to replicate, net of expenses, the S&P 500 VIX Short-Term Futures Total Return Index. The index offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects the implied volatility of the S&P 500 index at various points along the volatility forward curve. The index futures roll continuously throughout each month from the first month VIX futures contract into the second month VIX futures contract.
SPDR Gold ETF (NYSE:GLD) Visit Our GLD Category: HERE
The investment seeks to replicate the performance, net of expenses, of the price of gold bullion. The trust holds gold, and is expected to issue baskets in exchange for deposits of gold, and to distribute gold in connection with redemption of baskets. The gold held by the trust will only be sold on an as-needed basis to pay trust expenses, in the event the trust terminates and liquidates its assets, or as otherwise required by law or regulation.
iShares Barclays 20+ Year Treas Bond ETF (NYSE:TLT) Visit Our TLT Category: HERE
The investment seeks results that correspond generally to the price and yield performance, before fees and expenses, of the Barclays Capital U.S. 20+ Year Treasury Bond index. The fund generally invests at least 90% of assets in the bonds of the underlying index and at least 95% of assets in U.S. government. It may also invest up to 10% of assets in U.S. government bonds not included in the underlying index. The fund also may invest up to 5% of assets in repurchase agreements collateralized by U.S. government obligations and in cash and cash equivalents.