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The markets charged out of the gates at the beginning of the year and, as they tend to do, historically, began to lose steam in late April/early May. Since then all three major indexes, the S&P 500, Dow Jones Industrial Average, and the NASDAQ have all found resistance at the 1,400.00 level, 13,000 level, and 3,000 level, respectively.

Here is a one year look at the S&P 500, Dow Jones Industrial Average, and NASDAQ indexes:

Likewise, the SPDR S&P 500 (SPY), SPDR Dow Jones Industrial Average (DIA), and PowerShares QQQ (QQQ), exchange traded funds that track the indexes listed above, found resistance in late April/early May as well at the $140.00 level, $130.00 level, and $65.00 level, respectively.

SPDR S&P 500 (SPY), SPDR Dow Jones Industrial Average (DIA), and PowerShares QQQ (QQQ) have all been unable to break above their respective resistance levels, established in late April/early May, and are now consolidating near these levels once again.

When these indexes, and related ETFs, begin to consolidate at the resistance levels mentioned above, a short term price correction becomes very likely. As I have done since May, when I anticipate this correction I look to ETFs that move inversely to these indexes for an alternative hedge against the markets.

Beginning with the S&P 500 index, ProShares Short S&P500 (SH) is an inverse ETF that tracks the S&P 500 index and, therefore, moves inversely to this index. As shown below, while the SPDR S&P 500 (SPY) is currently trading near resistance and is likely to see a short term, downside trend reversal, ProShares Short S&P500 (SH) is consolidating near support and is likely to see a short term trend reversal to the upside.

Other inverse ETFs that track the S&P 500 include ProShares UltraShort S&P500 (SDS), whose leverage is doubled, and ProShares UltraPro Short S&P500 (SPXU), whose leverage is tripled.

Moving on to the Dow Jones Industrial Average, ProShares Short Dow30 (DOG) is an inverse ETF that tracks, and moves inversely to, the Dow Jones Industrial Average. As shown below, while SPDR Dow Jones Industrial Average (DIA) is currently trading near resistance and is likely to see a short term, downside trend reversal, ProShares Short Dow30 (DOG) is consolidating near support and is likely to see a short term trend reversal to the upside.

Other inverse ETFs that track the Dow Jones Industrial Average include ProShares UltraShort Dow30 (DXD), whose leverage is doubled, and ProShares UltraPro Short Dow30 (SDOW), whose leverage is tripled.

Lastly, ProShares Short QQQ (PSQ) is an inverse ETF that tracks, and moves inversely to, the NASDAQ. As shown below, while PowerShares QQQ (QQQ) is currently trading near resistance and is likely to see a short term, downside trend reversal, ProShares Short QQQ (PSQ) is consolidating near support and is likely to see a short term trend reversal to the upside.

Other inverse ETFs that track the NASDAQ include ProShares UltraShort QQQ (QID), whose leverage is doubled, and ProShares UltraPro Short QQQ (SQQQ), whose leverage is tripled.

Though inverse ETFs should generally only be used for short term trading, the inverse ETFs listed above may provide a strong hedge as our markets continue to fail to break above their year's highs.

A full list of inverse ETFs can be found here.

Source: Markets Hit Resistance, Look To These ETFs