Hey readers,
I am happy to announce Leverington Investments is back online!
The last month or so, we have seen the market trading sideways channeling between 10,300 and 9,800. This isn’t a huge channel, however it is big enough to make some nice money on if we play it right. I have been playing the market though triple leveraged ETF”s (FAS) and (FAZ). FAS is an ETF which moves at 300% with a handful of banking and financial stocks, including Citi-group, JP Morgan, and Bank of America. While FAZ is also triple leveraged it trades inversely, or negatively, with the same handful of financial stocks. So how am I using these ETF’s to make money you ask? I have been making sizeable profits by simply buying FAZ when the Dow gets above 10,250, then when the Dow falls down below 9,950 I begin to sell FAZ and start buying FAS. A perfect example is today when the market was up over 100 points and sitting at 10,310 I sold all my shares of FAS and started buying FAZ, sure enough the market finished the day down 20 points. It’s not to late, if I hadn’t purchased my shares of FAZ, I would purchase more tomorrow as early as possible if we see any downtrend.
Tomorrow oil executives from a number of companies will appear to testify before congress at 9:30 am eastern time. If this is anything like what happened when executives from the financial companies appeared before congress, it won’t be pretty. This market is extremely shaky and easily spooked. The market being up all day and selling off in the last hour of trading undoubtedly spooked a lot of people. We also see housing starts from May tomorrow, this will also sway the temperament of the market.
I think this combination will be enough to heave the bears on the hunt tomorrow which is why I want to buy FAZ and make money as the market and financials both sink.
The other stock I am watching tomorrow is Best Buy (BBY). The company is set to report quarterly earnings at the opening bell tomorrow. If the company reports earnings greater than 50 cents per share this stock could pop. However we have seen days where earnings beats mean nothing due to markets in a free fall. I don’t foresee that happening but it is something to keep an eye on. If Best Buy reports greater than 50 cents per share in earnings, I am buying.
To recap; I think we see the markets falling over the next couple days, BP could really get beat up the next few days as well. I wan’t to buy FAZ to make money as the financial sector falls and also want to buy Best Buy (BBY) if we see earnings greater than 50 cents per share.
I want to note that due to their nature being triple leveraged, FAZ and FAS are very volatile and often move between 3-8 percentage points in a single day. This can obviously bring big returns or big losses and investors should take this into consideration before trading triple leveraged ETF’s.
I’m in this game to make the big bucks, I hope you are too!
– Leverington 9