Bet Against the Emerging Markets


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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.  

EEV Stock Chart  

Chart Legend  

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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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 Stocks: EEV , ETF

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Sam Collins

Sam Collins

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