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Hedge This Market With SDS

by Sam Collins 10/27/09

UltraShort S&P 500 ProShares (SDS) -- This exchange-traded fund (ETF) seeks daily investment results, before fees and expenses, that correspond to the inverse of the daily performance of the S&P 500 (SPX). The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index.

SDS Chart

Chart Legend

We have regularly reviewed the SDS in the Trade of the Day, pointing to a number of buying opportunities over the course of the bear market. But since the market's turn up, this inverse ETF has not been on our list.

This ETF is a good hedge against a declining market or one that is entering a long period of consolidation.

The trading target for SDS is $43, but if the broad market stalls, it could easily trade into the $50s.

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