SKF-ProShares UltraShort Financials Hits New 52-week Low

ayork

ProShares UltraShort Financials Hits New 52-week Low

The SKF - ProShares UltraShort Financials (NYSE:SKF)

The controversial ProShares UltraShort Financials (NYSE:SKF) got down to $84.69 today, a new 52-week low for the ETF, far from the high of $302, so is now the time to buy?

How about is now the time to ban the SKF?  That's the real question at hand.  Jim Cramer and others have gone on record about how its time to get rid of the NYSE:SKF and as the pressure mounts on Wall Street Reform, perhaps the Powers-that-Be will get what they want. Today the SKF spent the day trading between $80 and $90 and along with its other bad boy Bull and Bear Financial ETFs, those wonderful tickers alone are:

FAS, FAZ, SKF, UYG

Mark-to-Market accounting took the U.S. Financial stocks on a wild ride this week, just check out how these ETFs performed on Friday, just look at volume, its pure Red Bull like trading, and the 3X ETFs are more like a double Red Bull Vodka drink:

The problem with mark-to-market accounting is that it officially has presumed there’s a functioning market in whatever asset is being valued -- and that means a deal between a willing buyer and seller that isn’t being forced to sell. Actually, no such market exists for many mortgage-backed securities.

Nevertheless, according to testimony at the March 12 congressional hearing, accountants have required many banks to calculate values based on distressed sale prices. That has meant large writedowns even on mortgage-backed securities that the institutions intend to hold to maturity.

Many believe that the Bullish (Long) and Bearish (Short) U.S. Financial ETFs will be killed in the near future by our government.  That may happen, it may not, and until then, the SKF and its friends can provide valuable trading opportunities to those who time the trades correctly.

Bank of America (NYSE:BAC) reports Q1 earnings on April 20th and Citigroup (NYSE:C) does the same but on April 17th, expect the same swings in these stocks and of course, bigger swings in the SKF and friends.

Happy Trading.

源济

ayork

The SKF Hits New Low and Short-Selling under Fire

The SKFOn Wednesday, the Securities and Exchange Commission plans to announce several proposals to permanently restrict traders from making bets that stock prices will decline when those prices are already dropping. Together with the ProShares UltraShort Financials (NYSE:SKF) hitting a new 52-week low last week makes for an interesting or better yet deadly trade.

The proposed restrictions on these so-called short sales follow a lobbying campaign by financial institutions and other companies, which have experienced sharp declines in their stock prices, and their allies in Congress.

Officials were working through the weekend to draft several possible rule changes, including a tougher variation of a former rule that prohibited short sales while a stock price was declining. That rule, known as the uptick rule, was put in place in 1938 in response to the market turbulence of the Great Depression. It was repealed two years ago. The uptick rule was more restrictive for short-sellers trading stocks listed on the New York Stock Exchange than those trading on Nasdaq. But one of the new proposals could change that and make it more onerous for short-sellers on all exchanges.

The S.E.C. also plans to announce that it is considering a proposal by the major exchanges that would impose restrictions on short-selling only after a stock suffers a daily drop by a specified percentage.

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