In the past few years, exchange traded funds (ETFs) have become even more versatile with the addition of leveraged and inverse ETFs. These funds allow investors to short the related indexes without technically having to short a financial asset. That means you can buy on bearish or bullish sentiment.
Toni Turner of TradingMarkets.com offers two examples of such funds. The first one is ProShares Short Dow 30 (NYSEArca: DOG), which has a one-to-one inverse correlation to the Dow Jones Industrial average. If the Dow falls 5 points, DOG rises 5. The second one is ProShares UltraShort Dow 30 (NYSEArca: DXD), which has a two-to-one inverse correlation to the Dow. If the Dow falls 10 points, DXD rises 20.