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Play These Inverse ETFs if Wall Street Loses Momentum

After the revival of Trump bump, Wall Street seems to have taken a breather. The Dow Industrials and S&P 500 indexes underwent their worst day in seven weeks on Oct 25. The S&P 500, NASDAQ Composite and Dow Jones Industrial Average lost about 0.5% each on that day (read: 5 Biggest ETF Winners of Trump Trade Resurgence).   

The broader market had a great run since Trump announced plans for tax reform in late September. However, the double whammy of rising rates and subdued earnings weighed on the market recently, if we go by an article published on Reuters. 

On Oct 25, 207, yield on 10-year benchmark Treasury yield was 2.44%. Yields have been on an uptrend on faster Fed policy-tightening projections. A prolonged source of easy money contributed to the eight-year long bull market greatly. Now, indications of fast ceases in easy dollars may cut the rally.

Plus, overvaluation concerns have been rife in the U.S. equity market for quite some time now. Though the ongoing earnings season has been pretty upbeat, investors probably have started analyzing to what extent this surge in earnings justify the inflated valuations, as per the Reuters article.

If this was not enough, lackluster earnings from AT&T T (down 3.9%) weighed on indexes. Boeing BA, Advanced Micro Devices Inc. AMD and Chipotle CMG lost about 2.9%, 13.5% and 14.6% on Oct 25 as an aftershock of earnings or guidance disaster.

Amid all the upheavals, volatility levels flared up, with iPath S&P 500 VIX ST Futures ETN VXX) rising about 3.1% on Oct 25. These worries may keep the stock market volatile, giving investors a chance to ride it out through inverse ETFs. While there are several options available in the space, we have highlighted a few ETFs that are widely spread across a number of sectors and not concentrated on a particular sector or industry.

ETFs to Play

ProShares Short S&P500 ETF SH

This fund provides unleveraged inverse exposure to the daily performance of the S&P 500 index (read: Politics & Geopolitics Loom: Short S&P 500 with These ETFs).

Direxion Daily S&P 500 Bear 1x Shares ETF SPDN

The fund seeks daily investment results of 100% of the inverse (or opposite) of the performance of the S&P 500 Index.

ProShares Short Dow30 ETF DOG

It offers inverse unleveraged exposure to the Dow Jones Industrial Average Index.

AdvisorShares Ranger Equity Bear ETF HDGE

This ETF is active and does not track a benchmark. Its objective is capital appreciation through short sales of domestically traded equity securities.

Proshares Short QQQ PSQ

It offers inverse unleveraged exposure to the NASDAQ-100 Index.

Bottom Line

As a caveat, investors should note that such products are suitable only for short-term traders as these are rebalanced on a daily basis (see: all the Inverse Equity ETFs here).

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AT&T Inc. (T): Free Stock Analysis Report
Boeing Company (The) (BA): Free Stock Analysis Report
Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
IPATH-SP5 VX ST (VXX): ETF Research Reports
PRO-SHRT QQQ (PSQ): ETF Research Reports
ACTIVE-BEAR (HDGE): ETF Research Reports
SPECIALTY - HEA (SH): ETF Research Reports
PRO-SHRT DOW30 (DOG): ETF Research Reports
DIR-D SP5 BR (SPDN): ETF Research Reports
Chipotle Mexican Grill, Inc. (CMG): Free Stock Analysis Report
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