6 Inverse ETF Areas To Tap As Markets Turn Red

By Zacks Investment ResearchStock MarketsNov 13, 2018 01:00AM ET

www.investing.com/analysis/6-inverse-etf-areas-to-tap-as-markets-turn-red-200358849

6 Inverse ETF Areas To Tap As Markets Turn Red

By Zacks Investment Research | Nov 13, 2018 01:00AM ET

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Wall Street, which staged a strong show post midterm election, was hit by Apple (NASDAQ:AAPL) and Goldman Sachs (NYSE:GS) -induced rout on Nov 12. Apple’s slump of more than 5% on the day, the lowest in more than three months, triggered an upheaval in the tech space.

The company’s main supplier for its Face ID technology, Lumentum Holdings Inc. (NASDAQ:LITE) , cut its revenue and profit forecasts due to lower orders from a major customer. Another supplier, Japan Display, also slashed its full-year guidance on “volatile customer demand” on Nov 12. Sensing this customer could only be Apple, apprehensions about declining demand for iPhones gripped the market.

Meanwhile, Goldman’s shares lost the maximum in seven years, at about 7.5% as Malaysia’s finance minister sought a full refund of fees with regard to a doomed investment fund. Goldman has been placed under scrutiny for its role in helping form the Malaysian state investment fund, known as 1MDB, from where the bank received about $600 million in fees, per CNBC.

Plus, the Fed policy tightening is in place. San Francisco Fed President Mary Daly believes that stock “valuations were higher than could be supported.” Hence, the latest selloff is justified. The Fed is now expected to enact its fourth-rate hike next month. So, rising rate concerns will continue to play in the background (read: Fed Meet Signals December Rate Hike: ETFs That Gained).

SPDR S&P 500 ETF (NYSE:SPY) (AX:SPY) , SPDR Dow Jones Industrial Average (NYSE:DIA) ETF (V:DIA) and Invesco QQQ Trust QQQ lost about 1.9%, 2.3% and 3%, on Nov 12.

How to Profit

Given the upheaval, investors could easily tap the opportunity by going short on global equities, at least in the near term. Below we highlight a few of them.

Dow Jones

Investors intending to play against the tumbling Dow Jones, may tap ProShares Short Dow 30 DOG (up 2.3% on Nov 12), ProShares UltraShort Dow30 (V:DXD) (up 4.5% on Nov 12) and ProShares UltraPro Short Dow30 SDOW (up 7.1% on Nov 12).

S&P 500

Investors can go against the S&P 500 with ProShares Short S&P500 ETF SH (up 2% on Nov 12) and Direxion Daily S&P 500 Bear 1X Shares SPDN (up 2.0% on Nov 12) (read: Trump's Presidential 2 Years: Must-See ETF Areas).

Technology

Technology stocks were hit hard on Nov 12 as Apple shares slumped on downbeat guidance from two of its suppliers. ProShares UltraShort Technology ( (V:REW) ) jumped about 7% on Nov 12.

Nasdaq

ProShares Short QQQ (AX:PSQ) (up 3.0% on Nov 12), ProShares UltraShort QQQ (BK:Q) (up 5.9% on Nov 12) and ProShares UltraPro Short QQQ SQQQ (up 9% on Nov 12) are good to play against the Nasdaq.

Small-Cap

One can short small-cap U.S. equities with ProShares Short Russell2000 RWM (up 2% on Nov 12).

EAFE

ProShares Short MSCI EAFE EFZ (up 1.8% on Nov 12) could be a good way to short stocks from the EAFE region and avoid the spillover effect of the U.S.-induced rout.

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Central Banks

Interest Rates

Next Meeting

FED

4.50%

Mar 19, 2025

ECB

2.65%

Apr 17, 2025

BOE

4.50%

Mar 20, 2025

SNB

0.50%

Mar 20, 2025

RBA

4.10%

Apr 01, 2025

BOC

3.00%

Mar 12, 2025

RBNZ

3.75%

Apr 09, 2025

BOJ

0.50%

Mar 19, 2025

CBR

21.00%

Mar 21, 2025

RBI

6.25%

Mar 10, 2025

PBOC

3.10%

BCB

13.25%

Mar 19, 2025

US 30	42,415.0	-386.5	-0.90%
US 500	5,709.9	-60.3	-1.04%
Dow Jones	42,801.72	+222.64	+0.52%
S&P 500	5,770.20	+31.68	+0.55%
Nasdaq	18,196.22	+126.97	+0.70%
S&P 500 VIX	25.65	+2.28	+9.76%
Dollar Index	103.595	-0.217	-0.21%

Crude Oil WTI	67.10	+0.06	+0.09%
Brent Oil	70.43	+0.07	+0.10%
Natural Gas	4.594	+0.195	+4.43%
Gold	2,906.19	-7.91	-0.27%
Silver	32.868	+0.059	+0.18%
Copper	4.6743	-0.0357	-0.76%
US Soybeans	1,021.13	-2.88	-0.28%

U.S. 10Y	4.243	-0.075	-1.74%
U.S. 30Y	4.552	-0.065	-1.41%
U.S. 5Y	4.019	-0.075	-1.83%
U.S. 3M	4.317	+0.010	+0.23%
US 10Y T-Note	110.95	+0.41	+0.37%
Euro Bund	128.01	+0.35	+0.28%
10-2 Yield Spread	31.32	+4.15	+15.27%

Apple	239.07	+3.74	+1.59%
NVIDIA	112.69	+2.12	+1.92%
Alphabet A	173.86	+1.51	+0.88%
Tesla	262.67	-0.78	-0.30%
Amazon.com	199.25	-1.45	-0.72%
Netflix	891.11	-15.25	-1.68%
Meta Platforms	625.66	-2.27	-0.36%

6 Inverse ETF Areas To Tap As Markets Turn Red

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