All that glitters is not gold
Innovation in the exchange traded fund (ETF) arena has opened up incredible opportunities for traders and investors to participate by using among others:
- Commodities as the underlying;
- Leveraged to the movement of the underlying;, and
- an inverse (opposite) move to the underlying.
Leveraged ETFs seek to magnify the returns of an underlying index for a single day. The level of magnification is included in the fund’s description but they are generally 2x or 3×. They can be upwardly leveraged or inversed.
They can track any asset, such as stocks, various market sectors, bonds or futures contracts. T
These innovations allow investors to participate at any point in an instruments cycle, whether long or short, as long as it’s moving, right?
Current Opportunity: VelocityShares 3x Inverse Silver ETN
The ETF offers us 3x daily leverage, inverse to the performance in the silver price. This makes DSLV a powerful tool for expressing a bearish outlook on the metal.
With the US Dollar looking oversold and potentially rebounding in the short term, we could see precious metals come under pressure.
Technical View: The price of the ETN has declined from it’s recent short term peak of $30.51 on 12-Dec-2017 to the current level (at the time writing) of $23.15. This level coincides with the channel support as well as the incline in place since July 2016.
Buy DLSV at $22.90/23.15
Take Profit: $27.80