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.

Who Can You Trust to Help Build Your Online Business?

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The Fashions and Designs of Women’s Hoodies

Today’s hoodies for women are far from the baggy, shapeless and predominantly black items we have been used to seeing on teenage boys. Now there are womens hoodies in all the top designer ranges, in a rainbow of colors and a multitude of stunning designs. There is no excuse for any woman to not have a hoodie or two in her wardrobe.There are hoodies in velour, silk and cashmere. Juicy Couture makes a whole range, with and without logos in short or long sleeves, including a style with a peplum. Kritik make some bright terry hoodies which team with matching shorts as beach and vacation wear and Pencey make a faux fur hoodie which is positively elegant.One of the hottest designs at the moment is the Kamikaze womens hoodie by Ed Hardy. Ed Hardy’s designs are celebrity favorites and can be seen on Miley Cyrus, Britney Spears and Ashley Tisdale. Online urban fashion stores stock all the well-known brands.Bench makes a beautiful soft grey cashmere mix hoodie with cutaway shoulders and Diesel has an attractive lightweight hoodie with crochet trim.A fresh idea in womens hoodies is hoodie dresses. These are just a longer length version of a pull on hoodie, though usually with short sleeves, in soft jersey fabric that can be worn as a mini dress. Worn over opaque tights or slim fitting jeans tucked into slouch boots these hoodie dresses are a fashionable addition to a young woman’s wardrobe.Among the newest bejeweled hoodies, as worn by Paris Hilton, are those of the Twisted Heart brand. Fantasia is a richly embellished hoodie with the gothic looking heart design on the back set with many tiny beads. Their Tropical Soul hoodie has silk drawstring ties and brightly colored beads in a heart design on the back. Whilst the Twisted Anchor hoodie has a nautical feel with flared sleeves, and an anchor motif in rhinestones.For teens and tweens, Hannah Montana hoodies are all the rage. All the girls want to look like their idol from the hit TV show, Hannah Montana played by Miley Cyrus. The show has been enormously successful and launched Miley on her singing career. Girls love the style of clothes Miley wears in the show and Disney has produced a range of fashion clothing based on her character. There are a number of different hoodies in the range, with sparkly metallic accents, and with a picture of Hannah emblazoned on the front.For older girls and young women who like to cycle, Rockstar’s ladies zip hoodie features a cozy fur-lined hood and an attractive grey and white stripe design with the double R Rockstar logo. Far too nice to wear on a bike this would make a great casual coat worn with leggings or jeans on a chilly day. If you are into snow sports the Roxy hoodies including the Roxy Porter hoodie is made from eco-friendly fabrics with a warm sherpa lined hood, perfect to keep you warm whilst looking totally cool.