Why Is This ETF Soaring?

If the market continues to drop, shares of the Direxion Daily Financial Bear 3X Shares ETF FAZ should skyrocket. It is designed to move in the opposite direction of the financial sector stocks. If they go down, FAZ will go up.

This ETF also uses leverage. This can add to the profits.

For example, if the financial sector drops by 1%, FAZ should rally by about 3%. If the sector is down 2%, FAZ should gain about 6% and so on.

But investors need to exercise caution. Leverage is a great thing if the market moves as predicted, but not if it doesn’t. If the financial sector moves higher, the opposite will happen. FAZ will fall by about three times as much.

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