Sunday, August 14, 2011
FAZ the Financial Bear
It didn't take long for inexperienced perma bears to get an expensive lesson in triple ETF's when the markets started to rebound two and a half years ago. Those who held on to FAZ, convinced that the Peter Schiff's of the world were right about the coming financial implosion (and Schiff was and is right, it was his timing that comes into question), learned first-hand that greed and common sense are two entirely different things.
Many newcomers didn't take the hint when the rally began earnestly in 2009 and held steadfastly onto FAZ until their losses were so great they had no other choice but capitulate. Welcome to the big leagues, kid.
Today, FAZ is trading at less than 1% of the highs it set in 2008. Only a quick trigger finger would have allowed the average investor to make any money on this ETF the past couple of years; nevertheless, there is some potential on the daily chart to take advantage of a triple ETF's power, providing greed doesn't overtake common sense once again.
One Year, Daily
The daily chart has turned bullish (and how many times have we been able to say that about a bearish ETF over the last couple of years?) surpassing five previous peaks on its latest leg up. That FAZ managed to rebound slightly below the 61.8 Fibonacci retracement is also a good sign, at least for the bears among us.
Two Year, Weekly
The weekly chart still has some work ahead of it. Ideally, a thrust above $88.75 should be enough to send even the bravest of bulls into retreat, paving the way for an ABCD pattern somewhere in the neighbourhood of $93.00.
A financial tornado looms.
In the balance are millions of investors who believe all is right with the world and that good will ultimately prevail.
Sunday, August 7, 2011
Two Bank Stocks Hold the Key
US bank stocks (Goldman Sachs and Bank of America in particular) may be at the heart of this most recent setback in the markets. They've performed terribly when measured against the S&P 500. Institutional and retail investors have fled US bank stocks in droves and this - more than anything - could be the real reason behind the market "fear" investors have been feeling of late.
There was a time when bank stocks were looked upon as the safe haven in the investing world. Even more so than the US dollar.
Banking Index vs SPY
What does it say, then, when Goldman Sachs can't keep pace with the stock market or even when pitted against the under-achieving Philadelphia Bank Index?
Goldman Sachs vs SPY
The "People's Bank," has lost ground to a basket of US bank stocks, despite all the tax payer's money the US government has thrown at it. How is this possible and why has it happened?
Goldman Sachs vs Phildadelphia Bank Index
As bad as Goldman Sachs has performed, another US government fave, Bank of America, has fared even worse.
Bank of America vs Philadelphia Bank Index
All that tax payer money and it seems investors still want nothing to do with either of these two US banking icons.
That doesn't bode particularly well for the US banking sector - or the stock market - as a whole.
Saturday, August 6, 2011
Friday, August 5, 2011
So You Want to Buy Gold Stocks?
GDX (aka Big Gold) closed at its lowest point vs physical gold since April of 2009.
Manipulation?
Perhaps.
It might be a simple matter that bankers hold our paper investments, and paper is all gold stocks really are.
Tuesday, August 2, 2011
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