Financials & Direxion 3X Bulls, Recent Highs (FAS, FAZ, JPM, BAC, GS, WFC)

To call the triple-leverage financial ETF of the Direxion Financial Bull 3X Shares (NYSE: FAS) volatile would be the understatement of the year.  It has become the day trading instrument of choice for those who trade financial stocks because it has such a low share price and because its triple-leverage adds that much more volatility.  What is interesting is that this  ETF is not just a bank ETF as it tracks the Russell 1000 Financial Services Index.  While it aims to diversify to all financial firms in that index with more than 200 components last year, it looks like the four top dogs of JP MORGAN CHASE & CO. (NYSE: JPM), BANK OF AMERICA CORP. (NYSE: BAC), GOLDMAN SACHS GROUP (NYSE: GS), and WELLS FARGO & CO (NYSE: WFC) may now more than 20% of the weighting.

We won’t hang a hat on a firm number because this changes and there have been many questions over how the triple-leverage is calculated throughout the day, particularly when you account for the ETF counterpart of the Direxion Financial Bear 3X Shares (NYSE: FAZ).  But the ETF put in a new multi-month high today.  It was only two months ago that this was on the verge of being perhaps the first ETF to see a reverse stock split because the price went so low.  This was under consideration as the price had dipped under $3.00 per share.

The “FAS” hit $10.05 on April 13, and it hit $10.00 yesterday.  Since the market’s lows and recovery it has yet to close above $10.00.  That highest close was Monday at $9.92.  But shares are more than 3% above that today at $10.25 and they have traded as high as $10.80 by our count this morning.  The FAS trades over 200 million shares on average per day.

The “FAZ” is down 7% at $6.08 on last look.  It trades roughly 100 million shares on average per day.

If the FAS closes above $10.00 today, the FAS would be at new highs not seen since early in February.  To show how volatile this instrument is, it closed out 2008 at $25.47 and briefly traded at $30.00 and higher after its November 2008 launch.

JON C. OGG