ProShares UltraShort Financials Hits New 52-week Low

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:

Name	Symbol	Last price	Change	Mkt cap	Volume	Open	High	Low
Direxion Financial Bull 3X...	FAS	7.20	+0.78 (12.15%)		229.95M	6.22	7.2	6.2
Direxion Financial Bear 3X...	FAZ	15.60	-2.12 (-11.96%)		85.75M	18.28	18.35	15.54
ProShares UltraShort Financials...	SKF	80.95	-7.38 (-8.36%)	1.03B	30.41M	89.92	90.5999	80.69
ProShares Ultra Financials (ETF)	UYG	3.09	+0.24 (8.42%)	1.81B	95.63M	2.81	3.1	2.79

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.