Take a 'Short' Boat to China

By Sam Collins,

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. 

FXP Stock 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 stock has executed a breakaway gap through its 50-day moving average. This is a powerful buy signal with supporting volume and a trading target of $53. 

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%.

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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 , FXP

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Sam Collins

Sam Collins

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