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Four Inverse ETFs to Invest in Right Now


Stocks and other risker assests might be tumbling, but the time is right to invest in inverse ETFs that provide quick-strike profits on the downside.

Harsh reality alert: Stocks and other riskier assets just want to keep on tumbling. We're too early into the fourth quarter to rule a rally out of the question, but the major U.S. indexes are in deep technical trouble and if the S&P 500 cannot hold psychological support at 1,100, the next stopping point could very well be 1,060. That implies 40-50 points of downside from where the index currently resides.

With that in mind, the time is still right for inverse ETFs. So put your active trader caps on and get ready for quick-strike profits on the downside with these inverse funds.

1. Direxion Daily Agribusiness 3X Bear Shares (COWS): Don't have a cow, but COWS is in rally mode because the Market Vectors Agribusiness ETF (MOO) is in a tailspin. MOO is an ETF I would be in favor of in a bull market, no doubt, and its long-term outlook is encouraging. That said, fertilizer producers are too high-beta to work here and COWS is the best way to short those companies without directly shorting the stocks. This new ETF has gained an astounding 63% in the past month alone.

2. Direxion Daily Healthcare Bear 3X Shares
(SICK): One of the best tickers out there, but this ETF really flies under the radar. As long as correlations remain high, health care stocks will not be immune to broader market's trials and tribulations. They may not decline as much, so that makes leveraging a bearish bet on the group a potentially smart call. Be advised SICK has sick volume, as in less than 1,200 shares a day.

3. Direxion Daily China 3X Bear Shares
(YANG): If you're looking for an attractive chart, YANG is one ETF to evaluate. Like COWS, this triple-leveraged fund is in rally mode right now. In fact, YANG is up nearly 5% on Monday despite some decent economic news out of China. If that news was bad, YANG could be up 10%-12% or more. Definitely one to use stop-loss orders with.

4. ProShares UltraShort MidCap 400 (MZZ): MZZ is basically the bearish cousin of the SPDR S&P 400 MidCap Trust (MDY). That ETF is down nearly 15% year-to-date, but the declines have accelerated recently as MDY is more than 21% in the past 90 days. If large-caps aren't a place to hide, mid-caps certainly are not. Seek refuge from the storm with MZZ as long as it stays above $53.

Editor's Note: This content was originally published on by The ETF Professor.

Below, find some more great ETF and market content from Benzinga:

Should China Be Labeled a Currency Manipulator?
By Jonathan Chen

Forced to Make Choices
By Adrienne Toghraie

Occupy Wall Street: The Movement Grows
By John Thorpe

Twitter: @Benzinga
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No positions in stocks mentioned.

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