Bears Increasing with Short ETF Gaining Popularity

If you’re an investor, you’ve been seeing some scary headlines of late:

‘Hindenburg Omen’ looms over Wall Street

Beware: Market valuation looks like 2007 again

Cramer: ‘Giant reset’ looming for markets

Stars aligned for a ‘serious’ US correction

And those are just from this week. Of course, there are bulls who take the other side—see Wharton professor Jeremy Siegel’s assurance from the week before, Keep buying—you ‘can’t lose,’ or Wells Fargo Private Bank CIO John Lynch’s estimation Thursday that S&P could trade at 1,900 ‘relatively easily.’

But if you think the Dow’s 15 percent rise (down from 19 percent a couple weeks ago) this year is simply unsustainable and a pullback is inevitable, or you’re convinced Fed tapering is nigh and is going to send investors into hiding, there are ways for bears to bet on a bust.

One is the short ETF, a.k.a. inverse ETF, and one industry source said there’s been a noticeable uptick in inflows into such instruments in the past few weeks, as more people have raised alarms about the market. Alternative ETF provider ProShares said it has seen net inflows of $3.8 billion into inverse products in 2013, although more than half of that was in the first three months of the year.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu