UltraShort S&P 500 ProShares (SDS) — This exchange-traded fund (ETF) seeks daily investment results, before fees and expenses, that correspond to the inverse of the daily performance of the S&P 500 Index (SPX). The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index.
I have regularly reviewed SDS, pointing to the number of buying opportunities over the course of the bear market.
Now, with the strong possibility of a reversal in stocks following the big rally from the early March lows, there is the opportunity for a trade here.
The SDS has pulled back to its major long-term support zone at $52 to $55, reversed on high volume, and penetrated the short-term downtrend line as well as the 20-day moving average — and has held the double-bottom.
Traders can look forward to a possible rebound to the 50-day moving average at $62, and perhaps even the 200-day moving average at $74.
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Sam Collins is a registered, fee-based portfolio manager who may be contacted at samailc@cox.net. You can also check out an archive of some of his most recent market outlooks.
