Fear is making a return to an overbought market.

Not only did the major indices become technically stretched on RSI, MACD, and Williams’ %R, but the Volatility Index (VIX) became too complacent at around 13.33. In fact, many times, when the VIX dips below 17 (again, a sign of complacency), we’ll typically see it spike higher shortly after, which can also lead to a dip in the markets. Not helping, Fitch just downgraded the U.S. credit rating to AA+ from AAA+, citing “expected fiscal deterioration over the next three years.”  That being said, investors may want to consider downside protection.

Looking for a way to generate just as much in a down market as in a raging bull market? click here.

One way to do that is with an ETF, such as the ProShares UltraShort Dow 30 ETF (DXD).  With an expense ratio of 1%, the ETF seeks to produce a return that is -2x the daily performance of the Dow Jones Industrial Average. In short, the DXD does well as the Dow Jones drops.


Ian Cooper