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Challenge Player Blog for DreyerD  

Turn charts of the market "right side up" during downtrends with inverse ETFs

August 18, 2007 | Comments: 0
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QID | SDS | DXD | TWM
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Another of the uses for inverse ETFs is to flip downtrends over on the charts. Most traders are best at researching and finding long ideas. When stocks turn down and it is time to short, traders are in less familiar territory. The charts just don't read as easily. One reason I love the inverse ETFs is that they turn market downtrends into easy to read uptrends on the charts. With all of my technicals "righted" I feel far more confident taking advantage of market corrections. With the availability of these new trading vehicles I never need to short. I never need to put energy into reading "upside down" charts. The charts of inverse ETFs offer another piece of information to help us digest what the markets are doing. When they are in raging downtrends like they had been from inception until last month you have added confidence in the strength of the bull. When the ETFs break out on the charts and begin uptrends you know the market is unhealthy. The health of the market will not return until the newly established "uptrend" is broken. Take a look at some of these inverse ETF charts (SDS, QID, DXD, TWM, MZZ, SRS, SKF), see if it helps you make more sense of a market turned upside down. Let me know what you think.


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