Via stockadvisors:

For those seeking to hedge a long portfolio or to speculate on a downside move in the market, Nilus Nattive, takes a look at UltraShort Dow 30 in his Dividend Superstars:

“This exchange-traded fund allows you to ’short’ the market — or profit from a decline — while giving you far greater diversification than picking out a few weak individual stocks.

“The ETF is designed to perform like a mirror image of the Dow Jones Industrial Average — times two. In other words, for every percentage point the Dow loses, this ETF should gain two.

“Of course, the opposite is also true . A substantial rise in the Dow would cause this fund to lose money twice as quickly.

“And while I believe there are some bargains in the Dow, I I think a few names in the relatively concentrated list of 30 stocks are due for more pain. More importantly, investors will likely sell stocks willy nilly whenever a new piece of bad news hits the wires.

“Such is the nature of bear markets. I expect we will see rallies followed by additional losses. For all these reasons, the UltraShort Dow ETF is the perfect way to begin hedging our Dividend Superstars portfolio. And its double leverage allows you to shell out less for more coverage.

“The beauty of these hedging devices is that they not only help protect your long positions, but they also give you a relatively easy way to try and book some gains in down markets. For now, I recommend you buy this ETF at 60 or better, and then place a stop loss at 50.”

Track Dividend Superstars picks at:

http://trackthepros.com/categories.php?category_id=579