Holding Your Breath and Looking at Short Opportunities

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

Last week, U.S. and global stock markets has their worst week since August 2011. The Dow Jones fell 5.82%, the S&P 500 tumbled 5.77% and the NASDAQ dropped 6.78%. The MCSI Emerging Markets Index plummeted 7.82%.

You were stopped out of the iShares MSCI Hong Kong (EWH), Avago Technologies Limited (AVGO) and Infoblox (BLOX), each at a loss.

A 2.9% fall in S&P 500 mini futures to a 10-month low during Asian trading hours suggests that your remaining position in the PowerShares S&P 500 BuyWrite ETF (PBP) is likely to be stopped out today at the market open.

Investors are in full-on panic mode and are throwing out the baby with the bathwater. Asian stocks plummeted to three-year lows overnight as a slump in Chinese stocks gathered pace. In addition, fears of a China-led global economic slowdown slammed markets across the globe. Shanghai shares dove 9% overnight to a six-month low, wiping out all of this year’s gains.

Of course, with today’s sophisticated exchange-traded funds (ETFs), there are ways to make money in the stock markets even when they are falling.

One such example is the ProShares Short S&P500 (SH) ETF whose performance corresponds to the inverse (-1x) or -100% of the daily performance of the S&P 500. Put another way, when the S&P 500 falls 2%, this ETF should rise 4%.

If you are a more aggressive trader, leveraged options include the ProShares UltraShort S&P500 ETF (SDS), which tries to reflect the -2x or -200% daily performance of the S&P 500.

If you really like risk, you could go for the Direxion Daily S&P 500 Bear 3x Shares (SPXS), which tracks the -3x or -300% daily performance of the S&P 500, or the ProShares UltraPro Short S&P 500 ETF (SPXU), which also tracks the -300% daily performance of the S&P 500.

Exclusive  Global Tech Companies Leaving China For India  

The trick is to identify when to enter such positions, as markets can bounce strongly as well.

With your Bull Market Alert portfolio likely fully in cash after you are stopped out of your remaining position, this week I am recommending that you just hold off on putting any of your capital at risk during such uncertain times.

So none of the ETFs mentioned above are formal recommendations for now.

And sharp sell-offs like these offer some of the best buying opportunities on the long side.

Once the dust settles, I’ll be ready to make a new Bull Market Alert recommendation.

NEW FEATURE — Receive your alerts via text! You now can receive a text message on your cell phone to inform you whenever a trading alert is sent. To add this free new benefit to your service, please send an email to CustomerService@NicholasVardy.com with the following information and mention in the email that you want your cell phone added to your account:

  • Your Name
  • Your Zip Code
  • Your Email Address
  • Your Cell Phone number

Please note that we can only deliver text messages to cell phones with U.S. or Canadian numbers. Standard text messaging rates from your provider apply.

Nicholas Vardy

share on:

Like This Article?
Now Get Our FREE Special Report:
Alternative Investing: Investing in Timber

Stock Investor editor Paul Dykewicz reveals why investing in timber may be one of the best long-term portfolio strategies you'll find today.

Get Access to the Report, 100% FREE

share on:


Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

Product Details

  • Forecasts & Strategies
  • Home Run Trader
  • Fast Money Alert
  • Five Star Trader
  • TNT Trader

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

Product Details

  • Cash Machine
  • Premium Income PRO (exclusively for subscribers of Cash Machine)
  • Quick Income Trader
  • Breakout Options Alert
  • Hi-Tech Trader

Jim Woods

Jim Woods has over 20 years of experience in the markets from working as a stockbroker,
financial journalist, and money manager. As well as a book author and regular contributor to
numerous investment websites, Jim is the editor of:

Product Details

  • Successful Investing
  • High Velocity Options
  • Intelligence Report
  • Bullseye Stock Trader
  • Eagle Eye Opener

Bob Carlson

Bob Carlson provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

  • Retirement Watch
  • Retirement Watch Spotlight Series
  • Lifetime Retirement Protection Program

Jon Johnson

Jon Johnson's philosophy in investing and trading is to take what the market gives you regardless if that is to the upside or downside. For the past 21 years, Jon has helped thousands of clients gain success in the financial markets through his newsletters and education services:

Product Details

  • Investment House Daily
  • Stock of the Week
  • Technical Traders Alert
  • Rapid Profits Stock Trader


Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

  • Dividend Investor