Both the UltraShort Financials ProShares (SKF) and the UltraShort Real Estate ProShares (SRS) skyrocketed today as volitility moved higher and investors look for additional weakness in the Real Estate markets and the Financials.
Home Construction Exceptionally Low
US Home Construction sunk to a fresh monthly low going back
to when the index began being recorded over 50 years ago. A lack of new
construction could lead to demand for existing housing if buyers are still
available in the market. Analysts believe that construction will continue to
decline through the winter and thus the strong demand for UltaShort Real Estate
The Federal Reserve did its part in causing the upswing in
UltraShort Financials by forecasting continued weakness in economic activity going
forward. Even more nerve racking is the belief by the Fed that past rate cuts
and actions to improve the financial markets have not had the effect desired
and that future rate cuts may not improve the situation either.
I would avoid the UltraShorts on an up 16% day like today.
But if they make a correction of 10% over the next week, that would be a good
opportunity to take a small position. These ETFs are volatile as one can see
from their charts around the middle of July of this year. The SKF plummeted from
$203 to $116 over the course of a week beginning on July 16th.