As Recession Fears Kick into High Gear, These ETFs Will Keep Clobbering Markets
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It’s the word on everyone’s lips this week: Recession.
The latest Bloomberg model puts the probability of a recession at 38% (or 19 to 31, great odds if you’re betting). Economists are split, with some saying the recession is coming, others saying it’s not, and a third camp saying it’s already here.
But whether we slip into a recession or just remain mired in a bear market, it’s safe to say traders and investors alike are starving for opportunities to grow their money right now.
And while all of the major market benchmarks are in the red, there are plenty of places to stash your cash right now - we’ve talked about a few of them already over the past few weeks, including grocery and healthcare stocks that have historically performed well in recessionary periods.
But those aren’t the only sectors where you can find capital appreciation in tough times…
Take Advantage of a Strengthening Dollar with this USD ETF
The dollar has been rising against the euro (its natural currency pair) steadily over the past year, up 16% since July 2021.
As you can see, the dollar has achieved near parity with the euro - and that’s thanks to the Fed’s commitment to raising interest rates.
As the old saying goes, “Money goes where money grows,” which means investors looking to make money on a currency investment will do better when interest rates are going up, so the dollar is attracting investors like we haven’t seen in years.
And that’s been great for the Invesco DB US Dollar Index Bullish Fund (UUP), which tracks the performance of the US dollar. It’s up 11.51% in 2022, while the S&P 500 benchmark is down 19.33%
An Easy Way to Profit From Bear Market Volatility
It’s no secret that volatility has spiked in 2022 as the bears have taken control of the markets.
Here’s a chart of the CBOE Volatility Index (known as the VIX, or the “fear index” - which measures expected price fluctuations over the next 30 days over the last year - July 2021-July 2022.
For perspective, take a look at the chart from the previous year, from July 2020-July 2021…
You’ll notice far fewer swings, fewer spikes, and longer periods of low volatility…
But to get even more perspective, let’s look at July 2019-July 2020…
The left side of the chart depicts “normal” volatility in the pre-pandemic bull market. Volatility is low, and the line is relatively smooth, with very few spikes - until COVID hit.
In short, we’re locked into a period of high volatility and will likely remain there as the bears continue to push markets down and recession fears weigh on stocks.
Smart investors can look at the iPath Series B S&P 500 VIX Short-Term Futures (VXX), which is an ETF that tracks the VIX.
It’s up 19.59% YTD, a full 40 points better than the S&P:
It’s Still a Good Time to Short the Tech Sector
After powering much of the run up the last 13 years, the once-vaunted FAANG stocks - Facebook, Apple, Amazon, Netflix, and Google - continue to decline in this bear market, pulling the entire Nasdaq Index (which is heavily weighted toward these companies) down 27% YTD.
That’s not changing any time soon…
The easiest way to profit from a decline in tech is the ProShares UltraPro Short QQQ (SQQQ), which tracks 3x the inverse performance of the Nasdaq.
It’s up over 80% YTD - and has peaks as high as +122% in recent weeks. This will continue as long as the Nasdaq declines.
CEO and Founder
Since beginning his journey to create Stock Navigators in 2018, Tim has continued to enhance his knowledge in the financial markets in futures, stocks, and options to name a few. He has brought a passion for education and the financial markets to drive the continued efforts of Stock Navigators to help individuals take advantage of the endless opportunities in the markets. He hopes to continue to build Stock Navigators into a company that provides financial freedom to those who have a passion for hard work.
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