Inverse Leveraged Index ETFs
The market recently entered a correction. It's important to remember that the last correction of a bull market leads to a trend reversal (bear market). Its too soon to tell if the market has topped, but even a deep correction provides an opportunity to buy inverse index ETFs (a list of ETFs is provided at the end of this article).
Inverse Index ETFs move opposite to the direction of the general market. This allows the trader or investor to "buy" an ETF to "short" the market. Shorting is generally not allowed in retirement accounts, but inverse ETFs can be bought and accomplish the same thing.
Above is a daily chart of the S&P 500 on Wednesday, 6 August 2014. The market has entered a correction, and the S&P has hit a new 8-week low, falling below its 50 day EMA (solid blue line). The 10 SMA (dashed blue line) has turned down and may cross below the 50 EMA if the big money continues to sell.
Above is the ProShares UltraPro Short S&P 500 ETF (SPXU). The ETF recently made an 8-week high, moving opposite of the S&P 500 index. Notice how the 10 SMA is possibly going to cross "above" the 50 EMA.
During a market decline, inverse ETFs are traded like going long a stock, capitalizing on an uptrend. SPXU is "inverse" leveraged 3-times the S&P 500, so if the S&P declines 1%, the SPXU rises 3%. There is the opportunity to make 3-times the down movement of the S&P, however you are also exposed to 3-times the losses should the index move to the upside.
Trade safe and manage risk,
Charles
Below is a list of leveraged inverse index ETFs: (ProShares)
SH ProShares Short S&P 500
SDS ProShares Ultra Short S&P 500 (2X Leverage)
SPXU ProShares UltraPro Short S&P 500 (3X Leverage)
RWM ProShares Short Russell 2000
TWM ProShares UltraShort Russell 2000 (2X Leverage)
SRTY ProShares UltraPro Short Russell 2000 (3X Leverage)
PSQ ProShares Short QQQ
QID ProShares UltraShort QQQ (2X Leverage)
SQQQ ProShares UltraPro Short QQQ (3X Leverage)
DOG ProShares Short Dow 30
DXD ProShares UltraShort Dow 30 (2X Leverage)
SDOW ProShares UltraPro Short Dow 30 (3X Leverage)
Important Disclaimer:
The information presented in the ProSelect Stock Report is for informational purposes. The information was based on data and charting programs from independent services and CC Trader LLC d/b/a TradeLikeaPro does not guarantee the accuracy of the information used in the analysis of securities presented. The information is not offered as a guide for trading ideas and setups. Investors and traders should conduct their own independent research before making any investment. Nothing contained herein should be construed as an automatic recommendation to buy or sell any listed security. Investing and trading involves risk. Before deciding on any investment, you should consider your investment objectives, level of experience, and risk tolerance. Do not trade with money you cannot afford to lose. You should seek investment advice from a professional investment adviser before engaging in investment activities.
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