Use ProShares Short S&P 500 as a Conservative Hedge
by Sam Collins 06/26/09
ProShares Short S&P 500 (SH) -- This exchange-traded fund (ETF) seeks daily investment results that correspond to the inverse of the daily performance of the S&P 500 Index (SPX).
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Since this is not as highly leveraged as the "ultra ETFs," it may be used to more conservatively hedge portfolios against a market decline.
Strong resistance on the S&P 500 rests at 920 to 930, and it closed at 920 yesterday. The purchase of SH could be an excellent choice in a market that will probably not break to new highs.
The target for this trade is $73.
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Sam Collins is a registered, fee-based portfolio manager who may be contacted at samailc@cox.net. You can also check out an archive of some of his most recent market outlooks.
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The charts are bullish for both indices, and it looks like they could reach my immediate target.
Thursday's dramatic acceleration, coupled with a 'key reversal day' on Monday, leads me to the conclusion that the markets will continue to rise.
Our internal indicators are now telling us that stocks are still a good value at this level.
The recent pullback in the First Trust ISE-Revere Natural Gas Index Fund (FCG) could offer a good opportunity to accumulate shares.
Unless the S&P 500 closes below 1,020, investors should be buying into this decline.
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