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FAZ is a bet on the fact that financials which have enjoyed a "V" shaped bounce in 2009 would again be going down hard.  I think by the middle of 2010 investing community is going to realise that once FED start increasing rates financials would not make much money.  Also, once the "Free" money which FED provided to big financials companies dries up people are going to realise we still have the same financial problems which we had in 2008 which crashed the market.  If I am right I am betting on FAZ to provide solid returns when financials turn negative.

Filed under: ETF Investing, Technical Analysis, S and P 500, Stocks to Buy, Financial Crisis

As the three-day Easter weekend approaches, volume is declining as both traders and investors shy away from a market that is fraught with uncertainty.

Not only are the Q1 earnings in doubt, but longer-term economic analysis by the ChangeWave team indicates that we can expect to see a trading range of 700 to 900 on the S&P 500 for at least several months. And this is supported by my own technical analysis.

The FASB will be making an announcement on Thursday around the market open regarding a change in accounting rules regarding valuing the toxic loans on banks balance sheets.  If they either rescind or change this rule, we should see the banks and financial stocks advance. 

This new rule will be effective for the first quarter 2009 reporting.  So the effect will be immediate and be reflected in their quarterly financial reporting which will be occuring over the next 4 weeks

Yesterday, I posted the following analysis:

The financial sector appears to have bottomed over the last couple of days.  House hearings on Mark to Market accounting are scheduled for Thursday.  If there is any hint of suspension or repeal of Mark to Market accounting will send the financial sector into a nice short-term rally.  If they reinstated the uptick rule that would be icing on the cake.  The only negative is that the Treasury Secretary is scheduled to appear before Congress and anytime he speaks it seems to trigger a negative response in the markets.