UltraShort Financials ETF Snaps Back

On March 3, I wrote an article called Ultra Financials Stretch, from which the following:

To give you an indication of where we are in this market, consider the popular ProShares UltraShort Financials ETF (SKF). Here's its six-month chart:


Notice that it's back up at the $200 line, a level it pierced only in November's crescendo crash, but turned back from sharply in January and February. Unfortunately, each of those tops was accompanied by an RSI higher than the current 62. Nonetheless, anybody holding this would be wise to have a trailing stop in place.

That being so, the opposite trade beckons, does it not? SKF's inverse, ProShares Ultra Financials (UYG) should now be nearing oversold conditions at an RSI of 30, and it is: 33.

Consider this week to be the snap back. Here's how SKF's six-month chart looks now:

SKF holders were glad to have placed a trailing stop, I'm sure! It rode to the peak of $250 and then bailed out at the beginning of the crash. The opposite trade, UYG, got down to an RSI of 29 and a price of $1.51 on Monday. It closed Friday at $2.35.

Comments

[john the ba...:]

good one, nice and clear analyzis !

Mar 16 10:15 AM

[AndrewBaker:]

Financials are bouncing around on a piece of elastic right now, and the 2x and 3x leveraged ETF are swinging even more: day trade with your eyes on the screen the whole time, or take a view and have nerves of steel when it goes the other way. I reckon last week's bounce has hit resistance, and with nothing apart from leaked memos and political sound bites to power the rise, get into SKF and FAZ, and enjoy the ride.

Mar 16 10:17 AM

[Erick Tippett:]

Mr. Kelly

I agree with your conclusions about this present market
action. I have FAZ (SKF is too expensive for my tastes)
This smoke and mirrors proppng up of the financials
can't last too much longer and I expect the etf shorts
for the financial sector to return to or surpass their
previous highs!

Good sailing.

EDT

Mar 17 02:40 AM

[Erick Tippett:]

Mr. Kelly

I agree with your conclusions about this present market
action. I have FAZ (SKF is too expensive for my tastes)
This smoke and mirrors proppng up of the financials
can't last too much longer and I expect the etf shorts
for the financial sector to return to or surpass their
previous highs!

Good sailing.

EDT

Mar 17 02:40 AM