Direxion 3x Financials Bull ETF: Volume Surges On Friday

A few readers have brought this to my attention so I wanted to share with you all the relative volume comparisons in FAS (FAS) (Direxion 3x Financials Bull), BGU (BGU) (Direxion 3x Large Cap Bull), and the - now seemingly puny - 1x DIA (DIA) (you know, actual Dow Jones ETF).  Let’s see these three on the daily chart.

FAS (3x Financial Bullish):

I won’t give comments on the technical structure, but want you to focus on the volume in each of the three funds I’m displaying here.

Let’s start big - the FAS is the 3 times leveraged Financials Bullish vehicle traded 350 million shares today (Friday). Yes, you read that right.

What’s more, look at the trend of volume as more traders have caught wind and are sticking their toes into this highly leveraged product.  We saw 50 million shares average in late January which quickly stepped up to 100M later, then 200M in early March and now 350M a week later.  This is phenomenally amazing to me how quickly this product has caught on to the general trading community.

And I can see why - it’s a relatively cheap priced ETF that recently doubled in value this week.  Price moved from $2.50 to $5.00 in a week (the XLF (XLF) Financial 1x ETF moved up roughly 33% on the week).  A 33% move up in the XLF translates to a 100% move up in the FAS.

What traders need to be aware - lest they get drunken with greed - is that a 10% decline in the XLF would wipe out 30% of the profits, and it gets worse as the XLF decline increases.  But that’s for another day.

Let’s move on to the BGU or 3x Large-Cap (roughly the Dow Jones) Bullish

BGU (3x Large-Cap Bullish)

Volume slightly trailed off after peaking Wednesday above 35M shares.  We traded just over 31 Million shares today - which may or may not seem like a large number to you.  The SPY (SPY) (S&P 500 ETF) ETF traded just over 330 Million shares today.  That’s what you’d expect from a major market ETF.

Notice the trend in volume is clearly up on BGU as more and more funds/traders discover its utility - but hopefully they are also considering the risk, particularly as we are forming a countertrend retracement swing into EMA resistance… but I promised to keep the discussion here focused only on volume.

Finally, let’s compare both of these 3x funds to the DIA, which is the Dow Jones (proxy) ETF.

DIA (Dow Jones 1x ETF):

The DIA traded 20 Million shares today.  That is paltry when compared to the SPY (300M), QQQQ (150M), and of course FAS (shown above at 350M).

It’s possible there’s an industry trend of volume rotating away from the DIA (and Dow Jones in general) towards the S&P 500 and particularly leveraged and triple-leveraged funds.  Notice the trend of volume in the DIA is clearly down since peaking around February 10.

This is one of the reasons I’ll be shifting all my trading operations away from the DIA and towards - for now - the SPY.

Keep looking for volume clues in other index and leveraged funds.

For comparison of 3x bearish counterpart funds:

FAZ (3x Inverse/Short Financial) traded 30 million shares
BGZ (3x Inverse/Short Large Cap) traded 10 million shares

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