SPDN: An Inexpensive Way To Profit When The S&P 500 Falls

Summary
SPDN is not the largest or oldest way to short the S&P 500, but it’s a solid choice.
This ETF uses a variety of financial instruments to target a return opposite that of the S&P 500 Index.
SPDN’s 0.49% Expense Ratio is nearly half that of the larger, longer-tenured -1x Inverse S&P 500 ETF.
Details aside, the potential continuation of the equity bear market makes single-inverse ETFs an investment segment investor should be familiar with.
We rate SPDN a Strong Buy because we believe the risks of a continued bear market greatly outweigh the possibility of a quick return to a bull market.
Put a gear stick into R position, (Reverse).
Birdlkportfolio

By Rob Isbitts

Summary
The S&P 500 is in a bear market, and we don’t see a quick-fix. Many investors assume the only way to navigate a potentially long-term bear market is to hide in cash, day-trade or “just hang in there” while the bear takes their retirement nest egg.

The Direxion Daily S&P 500® Bear 1X ETF (NYSEARCA:SPDN) is one of a class of single-inverse ETFs that allow investors to profit from down moves in the stock market.

SPDN is an unleveraged, liquid, low-cost way to either try to hedge an equity portfolio, profit from a decline in the S&P 500, or both. We rate it a Strong Buy, given our concern about the intermediate-term outlook for the global equity market.

Strategy
SPDN keeps it simple. If the S&P 500 goes up by X%, it should go down by X%. The opposite is also expected.

Proprietary ETF Grades
Offense/Defense: Defense

Segment: Inverse Equity

Sub-Segment: Inverse S&P 500

Correlation (vs. S&P 500): Very High (inverse)

Expected Volatility (vs. S&P 500): Similar (but opposite)

Holding Analysis
SPDN does not rely on shorting individual stocks in the S&P 500. Instead, the managers typically use a combination of futures, swaps and other derivative instruments to create a portfolio that consistently aims to deliver the opposite of what the S&P 500 does.

Strengths
SPDN is a fairly “no-frills” way to do what many investors probably wished they could do during the first 9 months of 2022 and in past bear markets: find something that goes up when the “market” goes down. After all, bonds are not the answer they used to be, commodities like gold have, shall we say, lost their luster. And moving to cash creates the issue of making two correct timing decisions, when to get in and when to get out. SPDN and its single-inverse ETF brethren offer a liquid tool to use in a variety of ways, depending on what a particular investor wants to achieve.

Weaknesses
The weakness of any inverse ETF is that it does the opposite of what the market does, when the market goes up. So, even in bear markets when the broader market trend is down, sharp bear market rallies (or any rallies for that matter) in the S&P 500 will cause SPDN to drop as much as the market goes up.

Opportunities
While inverse ETFs have a reputation in some circles as nothing more than day-trading vehicles, our own experience with them is, pardon the pun, exactly the opposite! We encourage investors to try to better-understand single inverse ETFs like SPDN. While traders tend to gravitate to leveraged inverse ETFs (which actually are day-trading tools), we believe that in an extended bear market, SPDN and its ilk could be a game-saver for many portfolios.

Threats
SPDN and most other single inverse ETFs are vulnerable to a sustained rise in the price of the index it aims to deliver the inverse of. But that threat of loss in a rising market means that when an investor considers SPDN, they should also have a game plan for how and when they will deploy this unique portfolio weapon.

Proprietary Technical Ratings
Short-Term Rating (next 3 months): Strong Buy

Long-Term Rating (next 12 months): Buy

Conclusions
ETF Quality Opinion
SPDN does what it aims to do, and has done so for over 6 years now. For a while, it was largely-ignored, given the existence of a similar ETF that has been around much longer. But the more tenured SPDN has become, the more attractive it looks as an alternative.

ETF Investment Opinion

SPDN is rated Strong Buy because the S&P 500 continues to look as vulnerable to further decline. And, while the market bottomed in mid-June, rallied, then waffled since that time, our proprietary macro market indicators all point to much greater risk of a major decline from this level than a fast return to bull market glory. Thus, SPDN is at best a way to exploit and attack the bear, and at worst a hedge on an otherwise equity-laden portfolio.

Baby Skin Care – Treating Cradle Cap and Nappy Rash Naturally

According to Loyola University, the average one-month-old baby is bathed four times each week and shampooed three times. Commercial Baby Skin Care Products are loaded with chemicals, fragrances and detergents that dry out sensitive skin and often cause skin rashes in babies and young children. As a result more products are applied with a further de-hydrating affect on your precious baby’s skin. For a natural approach to Baby Skin Care newborn babies need only an occasional bath in warm water and no soap or shampoo is needed. If you are treating cradle cap, nappy rash or skin rashes in babies, then use only natural baby skin care products.We recommend looking after your baby’s skin with Natural Products that are organic relief for your baby’s skin and scalp and won’t dry out skin. Baby skin care products should have a pH 5.5 and be free of Sodium Lauryl sulphate, soap agents and fragrances.Over 75 percent of newborn babies get nappy rash within the first months after birth. Nappy Rash most commonly occurs due to bacteria and detergent residues that are not completely rinsed off when nappies are changed and/or washed. It is important to keep your baby’s sensitive skin clean and well hydrated and if nappy rash does occur, we feel natural skin care products and natural treatment of nappy rash and skin rashes in babies is imperative, giving your baby the best organic start in life.The standard medical treatment for skin rashes and nappy rash is cortisone cream. Fortunately, some paediatricians prefer not use such strong steroids purely for cosmetic reasons. Try Pure Organic Aloe Vera to nourish, moisturise and protect your baby’s sensitive skin. Organic Aloe Vera will gently re-hydrate the most sensitive skin, without fragrance, colour, SLS or gelling agent added. Apply with every diaper/nappy change and don’t rub in; allow a few minutes to dry. The lotion will absorb naturally and allow for much loved nappy free time. We recommend washing the nappy area with clean water each diaper/nappy change then patting dry before applying Aloe Vera lotion. Without a powder base this baby skin care treatment insures no concerns of inhalation. Apply a barrier cream to protect your baby’s sensitive skin. A natural baby skin care barrier cream protects against further dehydration and assists in keeping nappy rash and skin rashes in babies at bay. Apply with every diaper/nappy change.Aloe Vera has a pH factor very close to that of the skin and it helps to restore the skin to its natural pH. Six antiseptics naturally contained in Aloe Vera soothe nappy rash, baby skin rashes, inflammation and irritated skin and reduce the chance of further infection. Aloe Vera is a mild anaesthetic, antibacterial & antifungal, containing anti-inflammatory fatty acids. These components have shown to assist in relieving itching, swelling, redness and pain. Aloe Vera is a natural moisturiser, fragrance and oil free, perfect for baby skin care products and treating cradle cap, nappy rash and other skin rashes in babies.Cradle Cap is a thick, yellowish, crusty rash that forms on the scalp and sometimes the eyebrows of babies. Cradle Cap can be found on newborn babies skin, on toddler scalps and if persistent cradle cap can still be found on pre-schoolers. Cradle Cap is not dangerous, only unsightly. Cradle Cap in babies and young children is caused partly by an over production of oil. We suggest, if harsh detergents are used in baby care products and used daily, the bodies natural oil production is stimulated to counter act the drying effects of these so called ‘gentle’ baby care products. Instead, apply Aloe Vera products directly onto the skin, just a fine mist at a time but apply regularly to soften cradle cap crusts, then after bathing rub gently with a towel or a soft hair brush to remove cradle cap crusts. Several attempts may be needed.Organic Aloe Vera Natural Skin Care Products [http://www.naturalskinandbeauty.com/natural-skin-care-products-with-aloe-vera] are ideal for baby skin care. Aloe Vera is natural skin treatment that will gently re-hydrate the most sensitive baby skin. Aloe Vera will cleanse, repair, moisturise and protect the most sensitive skin without fear of petroleum by products, SLS, fragrance, colour, gelling agents or fillers added.

S&P 500 Rallies As U.S. Dollar Pulls Back Towards Weekly Lows

Key Insights
The strong pullback in the U.S. dollar provided significant support to stocks.
Treasury yields have pulled back after touching new highs, which served as an additional positive catalyst for S&P 500.
A move above 3730 will push S&P 500 towards the resistance level at 3760.
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Pfizer Rallies After Announcing A Huge Price Hike For Its COVID-19 Vaccines
S&P 500 is currently trying to settle above 3730 as traders’ appetite for risk is growing. The U.S. dollar has recently gained strong downside momentum as the BoJ intervened to stop the rally in USD/JPY. Weaker U.S. dollar is bullish for stocks as it increases profits of multinational companies and makes U.S. equities cheaper for foreign investors.

The leading oil services company Schlumberger is up by 9% after beating analyst estimates on both earnings and revenue. Schlumberger’s peers Baker Hughes and Halliburton have also enjoyed strong support today.

Vaccine makers Pfizer and Moderna gained strong upside momentum after Pfizer announced that it will raise the price of its coronavirus vaccine to $110 – $130 per shot.

Biggest losers today include Verizon and Twitter. Verizon is down by 5% despite beating analyst estimates on both earnings and revenue. Subscriber numbers missed estimates, and traders pushed the stock to multi-year lows.

Twitter stock moved towards the $50 level as the U.S. may conduct a security review of Musk’s purchase of the company.

From a big picture point of view, today’s rebound is broad, and most market segments are moving higher. Treasury yields have started to move lower after testing new highs, providing additional support to S&P 500. It looks that some traders are ready to bet that Fed will be less hawkish than previously expected.

S&P 500 Tests Resistance At 3730

S&P 500 has recently managed to get above the 20 EMA and is trying to settle above the resistance at 3730. RSI is in the moderate territory, and there is plenty of room to gain additional upside momentum in case the right catalysts emerge.

If S&P 500 manages to settle above 3730, it will head towards the next resistance level at 3760. A successful test of this level will push S&P 500 towards the next resistance at October highs at 3805. The 50 EMA is located in the nearby, so S&P 500 will likely face strong resistance above the 3800 level.

On the support side, the previous resistance at 3700 will likely serve as the first support level for S&P 500. In case S&P 500 declines below this level, it will move towards the next support level at 3675. A move below 3675 will push S&P 500 towards the support at 3640.