Short the Financials

By Sam Collins,

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ProShares UltraShort Financials ( SKF ) -- This exchange-traded fund ( ETF ) seeks to achieve results that are twice the inverse of the daily performance of the Dow Jones U.S. Financial Index. 

SKF Chart

Chart Legend

These shares are highly volatile. In March, this inverse ETF traded above $260.

On Nov. 17, at $24.40, I said , "With the markets at a resistance line and banks considered overpriced by a top analyst, traders may want to take a position in this very volatile ETF for a quick trade ... Stop-loss orders should be entered at $22. The target for this trade is $28 to $30."

The stop-loss order at $22 was triggered, but a bottom appears to have followed shortly thereafter just below that level, and the long-term resistance line at $24 was broken in January. 

The trading objective is changed to $36 due to the powerful high-volume buying. Stop-loss orders should still be entered at $22.

This is an inverse, leveraged ETF and only suitable for day traders , not long-term investors.

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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: ETF , SKF

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