Embrace the Pullback: Buy the SSO
Since Monday the ProShares Ultra S&P500 (SSO) has dropped 3.7%. The pullback in U.S. equities is believed to be temporary. Thus the cause to buy the S&P 500 index via the SSO.
Today the SSO managed to claw back 0.7%. Since Mid August when the SSO was trading at its 52-week high the ETF has lost 6.2%. The Talking Heads are saying stocks will bounce and the SSO is the right way to play it should the indexes tick higher. Want another reason to believe that stocks prices will go higher? How about War.
Stocks often rebound after missiles are launched
While talk of military action often spooks markets and drives down stock prices, history shows that stocks tend to rebound once the first shots are fired and uncertainty over what could go wrong fade.
NEW YORK — When the U.S. military moves against rivals, the stock market's initial reaction is to fall as uncertainty soars. But stock prices typically don't stay down for long after the missiles are dropped, historical market data show.
Indeed, data compiled by three Wall Street firms that measure how stocks have reacted leading up to, and following, various types of U.S. military action, suggest that the stock market's current hand-wringing over the USA's expected strike at Syria might be short-lived. (source:USA Today)
The ProShares Ultra S&P500 (SSO) closed today at $79.84 and its shares are now -9.06% below its 52-week high.
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