ProShares UltraShort Financials (SKF)

The ETF SPDR Select Sector Financial (XLF) represents the value of the financial service firms that are part of the S&P500 index (about 13.7% of the total index). It can be used as a kind of proxy of the health of the US financial sector.
From the beginning of March 2009, XLF has been in an uptrend. It recently broke the trendline, failed to cross the 200 day moving average, and today crossed the 50 day moving average to the downside. This might be the signal that a downtrend is starting.

Let's now look to the inverse ETF: the ProShares UltraShort Financials (SKF). This ETF seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Financials Index.

What does the chart say?
1) The price has been in a trading range since early May.
2) Early June it broke the trendline and started raising (n°1 on the chart).
3) It then retraced a little bit (n°2 on the chart).
4) Then today it moved up a lot and finished the day above the previous high reached 3 days ago (n°3 on the chart).
5) That 1-2-3 setup is generally a bullish price configuration, especially when the volume of transactions increases simultaneously as it is the case here (see yellow zone on the chart).
6) Additionally the MACD lines form a bullish divergence: the MACD lines are moving up whereas the price stays around the same level during the same period (from early May till today).


I bought SKF @ 45$ before the close today.
Stop loss @ 40$.