NEW BEARISH Plays

UltraShort Semiconductor ETF - SSG - close: 18.18 change: -0.08 stop: 18.40

Target(s): 22.00
Key Support/Resistance Areas: 22.00, 20.00, 19.00, 17.00
Current Gain/Loss: +
Time Frame: four to six weeks
New Positions: Yes, See Entry Point Below

Company Description:
ProShares UltraShort Semiconductors 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. Semiconductors IndexSM FYI: The Dow Jones U.S. Semiconductor Index measures the performance of the semiconductor industry of the U.S. equity market. Component companies are engaged in the production of semiconductors and other integrated chips, as well as other related products such as circuit boards and motherboards.

The top five holdings are Intel (INTC), Texas Instruments (TXN), Applied Materials (AMAT), Broadcom (BRCM), and SanDisk Corp. (SNDK). (source: company press release or website)

Why We Like It:
Semiconductor companies that supply materials to the smart phone market have been doing better than their peers that provide chips for the PC market. Yet the chip sector in general has been underperforming. The SOX index broke down under significant support a few days ago and looks ready to begin a new leg lower. I am suggesting we take advantage of this weakness with a bullish position on the SSG.

The plan is to buy the SSG when it breaks out past the July high and hits $19.65. Our multi-week target is $22.00. More nimble traders may want to cross their fingers and hope for a pull back toward $17.25-16.75 as an alternative entry point but if you do buy the dip I would use a relatively tight stop loss. FYI: This is a double, inverse ETF. Expect volatility!

Suggested Position: stock/ETF @ 19.65

Annotated chart of the SOX:

Annotated chart of the SSG:

Entry on August xxth @ $xx.xx
Earnings Date --/--/--
Average Daily Volume: 178 thousand
Listed on August 21st, 2010