Direxion Funds is announcing the addition of four more 3x leveraged ETFs which will focus on Treasuries.  The bull and bear 3x Treasury ETFs will seek to return 300% the daily performance (or in the inverse for the bear ETFs) of the 10 and 30 Yr Treasury Indexes.  Just like all the Direxion ETF funds I’d expect these to be very popular with short term traders for hedging and leveraged day trading.

“We will continue to further expand and enhance our ETF lineup with such unique products,” said Direxion President Dan O’Neill. “This strategic move to offer leveraged Treasury ETFs is another example of our commitment to developing tools designed to help meet the demand of the tactically minded investor attempting to mitigate portfolio risk and opportunity.”

Here are the ETFs being offered:

– 10 yr Treasury Bull 3x (TYD) 300% leverage
– 10 yr Treasury Bear 3x (TYO) – 300% leverage
– 30 yr Treasury Bull 3x (TMF) 300% leverage
– 30 yr Treasury Bear 3x (TMV) -300% leverage

It should also be noted that Direxion will immediately add the word “Daily” to all its ETF names to reflect the fact the funds seek daily investment goals and should only be used for very short term trading.  There has been much discussion about erosion in performance over the longer haul in leveraged ETFs, so this is probably in response to that. 

I’m going to start doing some more chart analysis here at ETF Central.. in fact I’m  going to do more posting in general.  Today, I take a look at the Direxion Financial Bull 3x ETF (FAS) which is part of a family of ETF’s from Direxion that offer triple leverage (in theory) on both sides of the market.  There has been quite a bit of discussion recently about leveraged ETFs and how you should avoid them because they can kill a portfolio.  Nonsense!  Of course if not used properly any trading instrument will kill a portfolio.  Much of discussion centers around the fact that the performance of the leveraged ETF’s can vary dramatically because they seek daily investment results and many times not return 2x or 3x the underlying index over longer time periods.  While this is true and the longer you hold these ETF’s the more out of whack their performance may be, for shorter time periods, they offer tremendous trading vehicles.  Volume levels have absolutely exploded in all of the Direxion ETFs including FAS which today traded over 315 million shares!  It’s astonishing when you consider that Microsoft, IBM, Apple and Google combined don’t trade anywhere near that many shares.

Anyway on to the chart..

Financials have been on tear over the past few weeks and that’s reflected in the chart of the Direxion 3x Bull Financials ETF below.  The sharp V like move off the bottom has run it right up into resistance around the 50 day moving average which it tested today before reversing on heavy volume.  I think this sets it up for some short term weakness and a possible retest of the area around 5, but once the consolidation is complete look for a run up to the downtrend line around 8.  If it can get through that level, the next area of resistance is around the November lows & Feb/March highs around 12.  After a major correction, you typically get a big initial move up followed by a retest of the lows before the ultimate bottom can be put in, so watch for that once this March surge has run its course.

Forgive the lack of clarity in the chart.. I forgot to create the smaller chart so had to squish it a bit.