Looking To Play Berkshire, JP Morgan, Bank Of America To The Downside? This ETF Offers 3X Leverage

Zinger Key Points
  • FAZ is trading in an uptrend but hasn't printed a higher low since March 6.
  • When FAZ retraces, bullish traders want to see the ETF hold above the 200-day SMA.

The Direxion Financial Bear 3X Shares ETF FAZ was surging over 10% higher on Monday, with continued bullish momentum following the recent collapse of SVB Financial Group and Signature Bank, which has investors bearish on the banking industry.

FAZ is a triple leveraged fund that is designed to inversely outperform the Financial Select Sector Index.

Some of the more familiar names the ETF tracks include Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), weighted at 14.85%; JP Morgan Chase & Co JPM, weighted at 10.50% and Bank of America BAC, which has a 6.17% weighting within the fund.

It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to a long-term investment by experienced traders. Leveraged ETFs should never be used by an investor with a buy-and-hold strategy or those who have low risk appetites.

For traders wanting to play the financial sector bullishly, Direxion offers the Direxion Financial Bull 3X Shares ETF FAS.

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The FAZ Chart: FAZ gapped up about 9.8% higher on Monday, putting the ETF above the 200-day simple moving average, which is bullish. The ETF has been trading in an uptrend since Feb. 7, making a series of higher highs and higher lows, but hasn’t retraced to form a higher low since March 6.

  • Eventually, FAZ will retrace to print at least a higher low, which may take place on Tuesday because on Monday, the ETF printed a doji candlestick. When found at a local top, a doji candlestick can signal a reversal to the downside is imminent.
  • If that happens, bullish traders will want to see the ETF form a bullish reversal candlestick, such as a doji or hammer candlestick, above the 200-day, which could provide a solid entry point for a swing higher. If FAZ falls under the 200-day SMA, it could signal the current uptrend is over, which could provide a solid entry into its bullish counterpart, FAS.
  • FAZ has resistance above at $23.79 and $25.32 and support below at $22.42 and $21.06.

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