Chart of the Day: Our 'Insurance Plan' Is Working
But we would rather not need it to...
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The recent bearish action has been concentrated among all groups big and small. There really has been no safe place to hide, but having some protection in place is always helpful. The effect of holding the ProShares Short S&P 500 SH is to help reduce the overall volatility in the portfolio when uncertainty arises or just plain, hard selling occurs.
The latter is what has plagued markets, but the SH has provide some bullet-proof protection, even in a small way.
Notice the moonshot on April 4 last week, which followed a big move up the prior day. These inverse ETFs really move fast when the market moves down. The Moving Average Convergence Divergence indicator, in the second pane, is on a buy signal here. Stochastics, in the second-to-bottom pane, are on the move, so there is good strong momentum in SH. The average directional index, or ADX, in the middle pane, shows a strong trend is in place.
It is unusual to see a 10% move up in SH, which we have from last week. We hope it reverses downward, which means the general market would be moving higher.
The Portfolio is long SH.
