Are Traders sending an SDS?

Published on Friday, 22 January 2010 00:42 Written by Christian Paolinetti

New York, Jan 21^st (TradersHuddle.com) – Shares of ProShares UltraShort S&P 500 ETF (NYSE:SDS) were heavily traded this trading session, as the market had its second triple digit loss in a row, something that has not happened since May of 2009.

The ProShares UltraShort S&P 500 ETF (NYSE:SDS) seeks daily investment results, before fees and expenses, which correspond to twice the inverse of the daily performance of the S&P 500 index. The fund normally invests 80% of assets in financial instruments with economic characteristics that should be inverse to those of the index. It may employ leveraged investment techniques in seeking its investment objective. The fund is non-diversified.

Today the SDS saw its daily average volume spike to almost double, which evidence how traders were seeking a safe ground, as the market was selling off. As the bearish sentiment grows, so will be the buyers that materialize into inverse ETFs, especially the SDS.

The SDS doesn’t have a clear road ahead, but traders will be keeping a watchful eye to key technical levels, as the SDS has expected resistance at $35.35. If this level breaks then the SDS has room towards the $39 level, which will place us at the market’s November lows.