The market is trading close to all-time highs and many analysts are expecting a correction or sell-off over the next few weeks.
They argue that the market has come too far. Some consolidation is overdue and would be natural.
Retail investors can protect themselves against market downturns by using inverse ETFs. These ETFs move in the opposite direction as the market. If the market goes down, they will move higher.
They include the ProShares Short S&P 500 (NYSE:SH) and the Direxion Daily S&P 500 Bear 3X Shares (NYSE:SPXS).
SH is designed to move in the opposite direction as the S&P 500 Index. If the index is down by 1%, SH should rise by about the same amount.
SPXS also moves in the opposite direction as the S&P 500 Index, but it uses leverage and is designed to move by three times the amount. If the index is down by 1%, SH should rise by about 3%.