Bearish Chip ETF (SSG) Could Be An Appealing Play
The Nasdaq is showing some signs of being tired to put it nicely and given the intense correlation of the Philadelphia Semiconductor Index to the Nasdaq (88% according to the "Fast Money" crew), the ETF Professor decided to look at two semiconductor ETFs.
First, take a look at the ugliness in the Philly Semiconductor Index chart that is included here. That chart simply reeks of bearishness. Things don't look much better with the Semiconductor HOLDRs ETF (NYSE: SMH), which exactly mirrors the Nasdaq's 4% decline over the past five days. Intel (Nasdaq: INTC) and Texas Instruments (NYSE: TXN)account for more than 43% of SMH's total holdings, but either way, the Professor says it's time to get bearish on chips.
The play here is the UltraShort Semiconductor ProShares ETF (NYSE: SSG), which attempts to provide twice the daily inverse performance of Dow Jones U.S. Semiconductor Index. Obviously SSG is an inverse AND leveraged ETF, so be careful, but this ETF will likely benefit as SMH shows more weakness.
