Posts Tagged ‘3x Funds BGZ and BGU’

A Quick Comparison of 3x Funds BGZ and BGU

A Quick Comparison of 3x Funds BGZ and BGU

Courtesy of Corey at Afraid to Trade

With the S&P 500 up over 40% from its March 6 low, I thought it would be a good idea to take a quick look at 3x Leveraged Bullish Fund BGU and 3x Leveraged Fund BGZ for a chart and percentage comparison.  Let’s see them in action!

3x Leveraged Bullish Fund BGU

BGU

What’s surprised me the most is how closely BGU has tracked with the Dow and S&P 500 and doesn’t seem to be as affected by the “percentage decay” that other leveraged funds have suffered (see BGZ below).  It looks almost identical to the underlying index, despite being 3x leveraged.  That’s rare in the leveraged fund world.

We see the same “Broadening Formation” I discussed in a previous post on the Dow Jones.  The pattern is completing its upside target as shown here.

The one thing to watch is the glaring volume non-confirmation (or declining trend in volume) – volume spiked off the March 2009 lows at over 35 Million shares and now averages slightly above 10 Million – a significant drop-off.

Let’s compare the ‘chart perfection’ (in terms of tracking the underlying index) and now look at the Bearish Fund.

3x Leveraged Fund BGZ

BGZ chart

This pattern is what we would expect with a 3x (or even 2x) leveraged fund – quick swing ups (quick percentage gains) as the underlying index moves in a favorable direction but then a collapse as the index moves (in this c case) higher.

The risk in these funds is holding for a long time and trying to get back to break-even, which will never happen.

Notice that the S&P 500 made a swing low in December 2008 near 750 as the 3x Leveraged Bear Fund peaked at $130.  However, when the S&P 500 made the March 2009 low of 666, the BGZ traded at a lower high of $118.  The expectation was for the leveraged fund to make a much higher high but it was not the case – herein lies a major flaw of leveraged funds.

Leveraged funds suffer from percentage decay… the best example being that if you lost 50% of your capital, you could not muster a 50% gain to get back to where you started – you would need a 100% gain on your remaining capital.…
continue reading


Tags: ,




 
 
 

Chart School

Q2 GDP Advance Estimate: A Major Downside Surprise

Courtesy of Doug Short's Advisor Perspectives.

The Advance Estimate for Q2 GDP, to one decimal, came in at 1.2 percent, up from 0.8 percent for the Q1 Third Estimate (a downward revision from 1.1 percent). Today's number was far below most mainstream estimates, with Investing.com posting a consensus of 2.6 percent. However, the Atlanta Fed's GDPNow forecast was revised downward yesterday to 1.8 percent from 2.3 percent the day before. Today's update includes data revisions from Q2 2013 to the present.

Here is an excerpt from the Bureau of Economic Analysis news release:

Real gross domestic product increased at an annual rate of 1.2...



more from Chart School

Zero Hedge

USDJPY Plunges Back To Post-BoJ Lows, Gold Jumps After GDP

Courtesy of ZeroHedge. View original post here.

After the illiquid chaos of the last 24 hours, USDJPY is now pressing lower (Yen stronger) once again (under 103) after the gravely disappointing GDP data. Gold, and silver, are jumping higher and bond yields tumbling...

...

more from Tyler

Phil's Favorites

Greenwald Explains What Out-of-Touch Media Doesn't Get About Trump, Russia, and US Electorate

 

Greenwald Explains What Out-of-Touch Media Doesn't Get About Trump, Russia, and US Electorate

'People have been so fucked by the prevailing order in such deep and fundamental and enduring ways that they can't imagine that anything is worse than preservation of the status quo'

By Deirdre Fulton at Common Dreams

 

"You have this huge portion of the populace in both the U.K. and the U.S. that is so angry and so helpless that they view exploding things without any idea of what the resulti...



more from Ilene

Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Why Economists Are Better Than Markets at Telling You How the Economy Is Doing (Bloomberg)

If you want to know how the economy is doing, trust an expert rather than the financial markets, says a team led by Paul Donovan, UBS Ltd.'s managing director of global economics.

The stock market just did something it hasn't done in at least 45 years (Business Insider)

The stock market has been really boring. 

...



more from Paul

ValueWalk

NetSuite Inc Stock Soars On Oracle Corporation Bid

By Jacob Wolinsky. Originally published at ValueWalk.

NetSuite Inc (NYSE:N) is soaring this morning as Oracle Corporation (NASDAQ:ORCL) has made a bid to buy the company for $9.3 billion. This deal has been rumored for some time but obviously few expected such a large premium or did not think the bid was certaintly coming as the stock is up about 18 percent at the time of this writing which is a lot for a tech giant. Here is what the sell side is saying.

NetSuite – analysts react

Nomura

Should the transaction take place, Oracle would pay about 9x NTM EV / revenue (based on consensus estimates for NetSuite), above the average multiple paid in our precedent SaaS Software acquisitions analysis of 6.8x . Additionally, Oracl...



more from ValueWalk

Insider Scoop

Benzinga's M&A Chatter for Wednesday July 27, 2016

Courtesy of Benzinga.

The following are the M&A deals, rumors and chatter circulating on Wall Street for Wednesday July 27, 2016:

Sequenom Being Acquired by Lab Corp for $2.40/Share in Cash

The Deal:
Laboratory Corporation of America Holdings (NYSE: LH) and Sequenom, Inc. (NASDAQ: SQNM) announced Wednesday, that they have entered into a definitive agreement aunder which LabCorp would acquire all of the outstanding shares of Sequenom in a cash tender offer for $2.40 per share, for an equity value of $302 million.

The closing of the acquisition i...



http://www.insidercow.com/ more from Insider

Mapping The Market

Illusion of Choice

From Jean-Luc:

Looks like we are down to about 10 companies for our consumer goods:

http://www.visualcapitalist.com/illusion-of-choice-consumer-brands/

Just like banks, airlines and cable companies! 

The Illusion of Choice in Consumer Brands

Explore the full-size version of the above graphic in all its glory.

If today’s infographic looks familiar, that’s because it originates from a well-circulated report that Oxfam International puts together to show consolidation i...



more from M.T.M.

Digital Currencies

Judge Rules Bitcoin Isn't Money Because It "Can't be Hidden Under A Mattress"

Courtesy of ZeroHedge. View original post here.

By Everett Numbers via TheAntiMedia.org

In a landmark decision, a Florida judge dismissed charges of money laundering against a Bitcoin seller on Monday following expert testimony showing state law did not apply to the cryptocurrency.

Michell Espinoza was charged with three felony charges related to money laundering i...



more from Bitcoin

Kimble Charting Solutions

Junk Bonds at important inflection point, should impact stocks!

Courtesy of Chris Kimble.

Junk bonds have been quality at sending Risk On and Risk Off message to the broad stock market. Below looks at Junk Bond ETF JNK over the past decade.

JNK finds itself at an important price point below and what it does in the upcoming couple of weeks could become a big influence on the Risk On/Risk Off trade.

CLICK ON CHART TO ENLARGE

...

more from Kimble C.S.

OpTrader

Swing trading portfolio - week of July 25th, 2016

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



more from OpTrader

All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

more from David

Biotech

This Is Why Biotech Stocks May Explode Again

Reminder: Pharmboy and Ilene are available to chat with Members.

Here's an interesting article from Investor's Business Daily arguing that biotech stocks are beginning to recover from their recent declines, notwithstanding current weakness.

This Is Why Biotech Stocks May Explode Again

By 

Excerpt:

After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.

...



more from Biotech

Promotions

PSW is more than just stock talk!

 

We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more!

PhilStockWorld.com features the most important and most interesting news items from around the web, all day, every day!

News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...



more from Promotions

Help One Of Our Own PSW Members

"Hello PSW Members –

This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at jennifersurovy@yahoo.com with any questions.

Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!




FeedTheBull - Top Stock market and Finance Sites



About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

Learn more About Phil >>


As Seen On:




About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

Market Shadows >>