The recent pullback in the equities market has some investors spooked. Traders who are anticipating further pain can hedge against turns with inverse exchange traded funds that capitalize on the market’s misfortunes.
For instance, the recent stumble revealed that growth stocks were among the most vulnerable areas of the markets. Consequently, traders can hedge against any weakness with the ProShares Short QQQ ETF (NYSEArca: PSQ), which takes the inverse or -100% daily performance of the Nasdaq-100 Index. [Inverse ETFs to Hedge a Pullback in the Nasdaq]
For the aggressive trader, the ProShares UltraShort QQQ ETF (NYSEArca: QID) tracks the double inverse or -200% performance of the Nasdaq-100, and the ProShares UltraPro Short QQQ ETF (NasdaqGM: SQQQ) reflects the triple inverse or -300% of the Nasdaq-100.
Indicators are flashing warning signs that the equities markets are overbought after an extended bull run, reports Anora Mahmudova for MarketWatch.
The Office of Financial Research, which promotes financial stability and monitors the markets, recently stated that the stock market is dangerously overpriced and the excessive leverage will cause greater swings in the next market correction.