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Too Late to Short the S&P 500?

Mar 03 2009

Too Late to Short the S&P 500?

Is it too late to short the S&P 500 index with the rapid and consistent downturn the index has taken over the past month? If you feel the markets will not make a quick turnaround in a V chart formation or you think the markets will continue to drift lower, getting short the S&P 500 would be a possible trade at this time. And you can take a negative position without shorting the index by purchasing an inverse Exchange Traded Fund (ETF) like the Short S&P 500 Proshares (SH).

The Short S&P 500 Proshares ETF has rallied over the past two months beginning near $70.08 a share at the beginning of the year and finishing today at $90.72 a share, the highest mark since December 4th of last year. The index invests in financial instruments that represent the inverse of the S&P 500 index. I like the stability of the single inverse ETF while still enjoying the upside that could occur if the markets continue to adjust lower. Look for a decent early morning market rally to take a small position in proportion to your overall portfolio.

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