Over the past two months we have done some intensive work on understanding the role of leveraged and inverse ETFs and understanding why they trade as they do. As we all know now, 2x ETFs don’t move 2x over a sustained period of time. Also the inverse ETFs often don’t move on an equal basis and as you have seen there have been many times that both the long and short ETF have been simultaneously trading well under their 200-day moving average.
There has been much written about this and most of the information on the internet is fragmented and in some cases incorrect. What we decided to do is to put together a comprehensive report which will allow to understand how and why leveraged and inverse ETFs trade as they do and what it means to you as a trader and as an investor.
The report was written by David Weilmuenster who is on my research staff. I will warn you ahead of time, it’s a heavy read. David has two degrees from MIT (one being in Physics) and David has the trading experience along with the intellectual and mathematical ability to fully comprehend the intricacies of ETFs.
Go slowly reading the report. Its certainly one of the more in-depth Trading Lessons of the Day we’ve ever written and it may be the most comprehensive report on leveraged ETFs that’s available today.
You can find the report on my research site ConnorsResearch.com. If you have any questions after reading it, please feel free to send them to me at l.connors@cg3.com and I’ll get them answered for you.
I hope you enjoy and learn from our study.
This is from Larry Connors’ Daily Battle Plan which he publishes each morning. If you’d like to take a free trial click here, or call 1-888-484-8220 ext 1 to start your free trial today.
Larry Connors is CEO and Founder of TradingMarkets.com and Connors Research.