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.…
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ValueWalk

Investors urge pharmas to develop treatments for COVID-19

By Jacob Wolinsky. Originally published at ValueWalk.

Investors urge pharma companies to work collaboratively on developing treatments for COVID-19

Global pandemic calls for urgent and collective action to heal the sick and to prevent further contagion.

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Did Capital One Run Into A Commodity Prepay Wall?

ourtesy of ZeroHedge View original post here.

Submitted by Jacques Simon,

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DAX Index Hits Two 18-Year Support Lines, Creates Large Bullish Reversal

Courtesy of Chris Kimble

Has the DAX index from Germany experience a large decline of late? Yes, it has!

Has the decline broken long-term rising support lines? Not so far!

This chart looks at the DAX index on a monthly basis over the past 25-years. Over the past 6-years, it has traded sideways inside of the blue rectangle at (1).

The decline this year saw the DAX hit two 18-year rising support lines at (2) last month, where a large bullish reversal took place.

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Anyone holding bitcoin would have watched the market with alarm in recent weeks. The virtual currency, whose price other cryptocurrencies like ethereum and litecoin largely follow, plummeted from more than US$10,000 (£8,206) in mid-February to briefly below US$4,000 on March 13. Despite recovering to the mid-US$6,000s at the time of writin...



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Promotions

Free, Live Webinar on Stocks, Options and Trading Strategies

TODAY's LIVE webinar on stocks, options and trading strategy is open to all!

Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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Lee,

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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...

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