Short China Now

Shutterstock photo


ProShares UltraShort FTSE/Xinhua China 25 ( FXP ) -- This exchange-traded fund ( ETF ) seeks daily investment results, before fees and expenses, that correspond to twice the inverse of the daily performance of the FTSE/Xinhua China 25 Index. The fund normally invests at least 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. 

FXP Chart  

Chart Legend  

FXP appears to be executing a saucer bottom. In late December, the 20-day moving average crossed above the 50-day moving average, which gave a trading buy signal and resulted in a gain of more than 30%. 

Now the stochastic has issued a buy signal. Buyers of this very speculative inverse fund could benefit from a trade with a target of $11. 

A word of caution: This fund is for traders only. Because it is constructed to move at twice the inverse rate of the underlying investment, it carries greater risk than an ordinary ETF, so investors should use stop-loss orders.

Also, 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%.

Related Articles:

The Secret to Money-Doubling Trades They Don't Want You to Know
Professional traders Nick Atkeson and Andrew Houghton reveal their proven, time-tested strategy to finding money-doubling trades in a new report. It's the trading "secret" so effective they were banned from sharing it with you -- download your FREE copy here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Investing Ideas
Referenced Symbols: ETF , FXP

More from Sam Collins


Sam Collins

Sam Collins

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by