ProShares UltraShort MSCI Emerging Markets Fund (NYSE: EEV) — This double inverse exchange-traded fund (ETF) seeks daily investment results that correspond to twice the inverse of the daily performance of the MSCI Emerging Markets Index.
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This fund, which normally invests at least 80% of assets in financial instruments with economic characteristics that are inverse to those of the index, should be used only by traders as a bear market investment since its objective is to short stocks in emerging markets.
After a breakout from a bull channel Tuesday, May 4, EEV ran from $54 to $65. But since Friday, it has plunged back to support at its 50-day moving average at $50.87.
In its wake it left a huge gap at $57.21 to $52.28, and gaps are usually filled shortly after opening. A further decline in the market could swiftly close the gaps for a quick 7-point trade.
Keep in mind that leveraged ETFs carry greater risk than ordinary ETFs, so investors should use stop-loss orders. And the SEC has determined that “ultra” funds are most appropriate for short-term trades and are not good long-term investments.
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