ProShares UltraShort Technology ETF (NYSE: REW) — This inverse exchange-traded fund (ETF) seeks to return twice the inverse of the daily performance of the Dow Jones U.S. Technology Index .
REW has been in a bull channel since early May. The top of the channel is at just over $26 with support at around $21.
Yesterday’s breakdown by the technology sector will likely bring in more sellers today and, thus, another advance for the inverse ETF.
The gap that resulted from yesterday’s panic need not be closed in order for the trend to continue, so if you intend to trade REW, a half position could be bought now with the intent of adding on a pullback or a further breakout.
Keep in mind that this leveraged ETF carries greater risk than an ordinary ETF, so investors should use stop-loss orders.
The SEC has determined that “ultra funds” are not good long-term investments and that they are most appropriate for short-term trades. The margin requirement for most leveraged ETFs is 100%.
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