Thursday, February 26, 2009

GT Blog Feb 26, 2009

For GT Blog February 26, 2009

More on the beaten up Financials

As of mid week the Canadian Financials are down about 55% from their June 2007 peaks – and the US Financials are down a stunning 85% from their June 2007 peaks

We can explain away the severe US financials under-perform by arguing the Canadian banks are in better shape – but – there could be another reason for the US debacle – undeclared shorting via the ProShares UltraShort Financials ETF otherwise known as the SKF

Over the past several weeks the average daily dollar volume on the SKF is about $7.1 billion which equals the summed dollar volume of the SPDR Financial index top 4 stocks by weight. Money flowing in and out of the larger ETF’s can move the underling asset be it stocks or gold – as observed when the SPDR Gold Trust ETF (GLD) is subjected to bullish and bearish stampedes

Note the failure of the SKF to make new highs through February – a bad omen for the US Financial bears

The Double Short Financials SKF in action – What?

1 comment:

Canadian Money said...

If Put Options are included in the fund (I don't know if that is the case), the losses may be due to the impact of a sideways market move on the dollar value of Puts.