FAZ Offers Opportunity For Investors

I hope everyone had a great Halloween!  It was little chilly but it was fun.  I was looking at several stocks yesterday while handing candies to trick or treaters and noticed something interesting in FAZ.  Remember that FAZ is an investment fund that is inverse of financial index performance.  As financial index moves higher, FAZ will move 300% in opposite direction.  



Below is a 3 month chart of FAZ with support and resistance levels identified.  For the past 2 month or so, FAZ has been in consolidation phase.  I’m not completely sure when this consolidation will end but my guess is this week.

The reason why this consolidation is interesting is because I am expecting a sharp movement once the consolidation is complete.  The problem is no one knows the direction of the movement.  That’s is why it is important to keep an eye out on FAZ this week to see which direction it will break.  Below is year to date chart.  As you can see, there is a long term resistance level crossing near $16.  If FAZ is to break upward, then I expect it to make a strong move towards $14-$16 area.  However, if FAZ is to break downward, then I expect it to make strong move towards $11-$10 level.

I would recommend going long if and only if FAZ closes above $12.75 this week.  Let’s wait and see if FAZ can break upward and start moving towards $16.