First thing to notice is that the estimated NAV for today is 35.37.
The ETF closed higher at 36.24, so expect that tomorrow, the ETF will
have a -2% adjustment to any changes in the RIFIN.X.

Today saw a large swing in the RIFIN.X, which means a big loss of
value in the ETFs. Today, RIFIN.X ended at 662.46. The last time it
was close (660.53), the NAV for FAZ was 40.38, now it is 35.37 (a 12%
loss in value). FAS went from 27.69 to 26.55 (a 4% drop in value).

Right now, there seems to be a strong resistance in the RIFIN.X at
about 600. In perfect trading, a move to 600 would put FAZ at 47.60. A
sudden drop would put it at 45.37. The point here is don't expect to
see it much higher than 47 in the next few days.

A drop to the RIFIN.X low of 457.02 will bring FAZ to 102.71 in
perfect trading. This is down 15.7% from 121.91 when the RIFIN.X was
at 660.53.

There is a ceiling on the RIFIN.X at about 690. A move to there
tomorrow would put FAZ about $31. If it closes above 700 soon, we will
likely see some very new lows. Of course, if it continues to move
between 690 and 600, we will also continue to see this value erosion
and hit new lows.

Hello sir...where do you go to see the estimates?

I have a spreadsheet that I've been using to track FAS and FAZ since
November 28th. The inputs come from Google finance (just look at
FAS.NV and FAZ.NV in the morning, and RIFIN.X at night), the formulas
I worked out myself. I've put out other posts on how to calculate the
numbers.

He is correctly describing the leverage decay process.   I haven't
double checked his numbers but they seem to be in the right
neighborhood.

This has been discussed hundreds of times and as FAZ attracts newer
investors, will continue to be.

I agree it's been discussed before. I've been discussing it for weeks.
I think it's important to put these number out for people to get a
perspective on what they have. I see a thread started with the title
"Averaged down to 50, Should I Abandon Hope?"  I see other threads
where people are saying they are in the $46-$48 dollar range. And a
lot of these posts are followed with the usual replies of "just hold,
it will come back." But, if you believe in TA, then the technicals
show that going above $47 in the next few days is very difficult, it
would take a major news event. GM bankruptcy is the only thing I could
think of, but that isn't due until the end of the month, and in all
likelihood, they will get their money and that will cause us to break
through the RIFIN.X ceiling (not that autos have much to do with
financials, but the market euphoria will bleed over).

fjordl, very good analysis, and your writing is very clear.  I hope
you are profiting from all this work.

fjordl,

First:  thank you for your analysis.  I consider us all lucky to
benefit from your insight.

Could you tell me:  What is the significance of FAZ.NV closing today
at 51.06, with FAZ closing at 36.24?   (FAZ.NV open at 46.05, FAZ open
at 48.40)

You said to check *.NV in the morning, and RIFIN.X in the evening.
What is the mechanism at work here?

Also, recognizing the 'value erosion' at work, as time approaches
infinity the value of FAZ will go to zero.  Is there a plan that you
know of for the fund managers to execute a reverse split (of sorts) ?

Thanks again!

The FAZ.NV at 51.06 was the Net Asset Value at the *start* of
yesterday (when the stock was at 50.44). Direxion doesn't issue a new
NAV until the next day, which is why I check it in the morning around
10:30. Essentially, it's the actual price of what someone owns when
they have a share of FAZ as of that morning. You can actually take
your share to Direxion and say "I want to trade this for my underlying
stock" and they have to give it to you. This process keeps the price
in line with what they own. However, because they were invested all of
yesterday, and the financials went up, you can expect that the NAV
this morning will be close to 35.37. To get an idea of what the true
value is in the middle of the day, use FAZ.IV.

When I say to check the .NVs in the morning, it's just because they
don't release that information until the next morning, whereas the
RIFIN.X is updated in realtime, so you can get that information at
close. I put these numbers into the spreadsheet. To be able to do my
projections.

I don't know Direxion's plans (or lack of) for reverse splitting. They
mentioned leverage trap in their prospectus, but I'll bet they didn't
expect it to be this bad. It's also not the case that these
necessarily go to 0. My feeling is that FAZ will, but if you go back
to the low volatility, mostly slightly increasing historical pricing
we had before this year, then FAS will continue to grow (while FAZ
will continue to shrink). Just as long as there isn't some single day
33% downswing that knocks it out (that would have to be monstrous
news). But you absolutely cannot buy FAS as an investment with this
volatility. It's currently trending to 0 as well because of the
swings.

I have made an incredible amount of money on FAZ, and then it turned
around and I lost an incredible amount to get to close to break even.
It was then that I started tracking it very closely. Part of what
motivates me to post this is to try to make sure no one get caught as
unaware as I was. I was lucky that I entered low and it came back to
where I was and I emphatically didn't want to take a loss so I sold
just above my break even point (made $500, woo). If I had held, I
would be extremely booched (I'm talking in the 80s) and I realized
from this research that FAZ wasn't going back to those levels again
and that I had to treat it differently than other trades.

I've made a little bit off of FAZ and FAS since then, but I'm not as
full bore on it as I was before (once bitten, twice shy). However, I
have a few things in play that I hope will pan out. What I really am
looking for is FAZ to shoot up like it did in November. I was thinking
like many here the fed was only going to cut .25 and that would
trigger RIFIN.X to drop. My feeling is that if RIFIN.X gets to 500,
then I'll have a good entry back into these ETFs. My bet then will be
that the government will do something to cause a buying craze again
back to 690, so I'll place my trades based on that. But right now,
with it going between 600 and 690, it seems like more of a gamble each
day, especially right now when it's in the middle.

500 is 500 bro. Congrats, that's pure and clean.  I've made 6800 on
Fas, Faz, Uyg and SKF.

I follow the SKF chart for my entry points into FAZ.  Sold AH
yesterday due to your thread and might get back into FAS on a dip.
(Going to Nav, pushed FAS, so I unloaded and someone bit)

While, I do see S&P profits down next year, there's an eternity
between now and then.

Fast Money folks are bullish, and they see S&P 1000.  Might as well
just wait until 10am before making any wagers.

http://stockcharts.com/h-sc/ui?s=SKF&p=D&yr=0&mn=7&dy=0&id=p353586725...

Guys, BTW is this erosion described somewhere on Direxion pages?
Having short and ultrashort both losers in a period of weeks, seems
they are cheating customers, unless they declare it in conditions and
stock description.

What do we expect FAZ to open at?

39

justin.. wrong question.  It's what price do you want to lock in
profits.  I like 36.50 as an entry.

akey,

they explain it very clearly in the prospectus
have a look

I got in at 35.50  how far should my greed go?

pogee,

whats a good sell price??

for today that is...

Sah, I'm no genie.  Actually, change that... if I said I was, would
you trust me?  If the answer is yes, I'll give you my paypal address
so that you can give your money to me for free.

well, since you were quite accurate yest on faz price, i thought u may
have an idea today....din't expect any cheeky answer..sorry that i
asked!

yeah, it's my blunt, boring (but accurate) sense of humor.  Good on
numbers, still working on the politeness aspect.   Waiting for another
handle.  Measuring FAS and FAZ feasibility today.  Gotta be able to
switch gears in 2 minutes.   Market wants to go up still...

nice call on the 36.50 pogee...gracias.

bah! i had my order at 36 and i missed the bus =/

Its gonna be much harder for the bulls to rally up without the
government throwing tax payer money in with them.

FAZ all the way all day!

Since the auto bailout is not coming out today, and also OPEC is
cutting the production of oil, and also the Morgan Stanley wider than
expected cuts, the market will react near the final hour of trading.

With yesterday's gains, most of it will be given back due to the fact
that the Fed has no more bullets to fire.

It's like they had 4 bullets left, they fired 3 yesterday to slow the
economic disaster, and the last bullet isn't going to do anything.

So what if the rates are record low? All of the economic data are also
record lows too. Everything is low.

chyn - whats withthe nonsense posting in every thread, both on FAS and
FAZ.. are you that lacking of attention from your parents?