Since December of 2105, there have been three distinct periods of high volatility in the SP 500 which triggered sharp rallies in the BetaShare ETF with the symbol: BBUS.
BBUS is an inverse ETF, which means the share price will rise when the SP 500 trades lower. It’s also weighted, which means that a 1% move in the SP 500 Index will correspond to a 2.5% move in share price.
From December 17th, 2015 to January 19th, 2016, the SP 500 fell from 2077.50 to 1856.25.
This 10% sell off pushed the price of BBUS from $11.85 to $15.20, roughly a 28% gain.
As the chart below illustrates, over the course of 2016 there were two other periods when the BBUS saw sharp moves higher of over 15%.
The general point is that the listless drift continues for the SP 500, which hasn’t gained 1% or more in a single day for the last 70 trading sessions, the longest streak since 2007.
The price of BBUS is currently $6.70.
Over the last three trading sessions, volume for the Dow Jones 30 and the ASX 200 have both dropped by about 20% versus their 3-month rolling averages.
Some of the reduction in turnover is seasonal due to the Northern summer. However, many analysts are pointing to tonight’s Senate testimony from FED Chief Janet Yellen as a focal point which has kept traders on the sidelines.
At around midnight Sydney-time, Ms Yellen will address the Senate Banking Committee. She will update lawmakers on interest rate policy, the rate of balance sheet normalization and take questions.
The “cause and effect” logic is that if Ms Yellen’s comments reflect a more “hawkish” position from the FED on rate hikes and reducing the $4.5 trillion balance sheet, US equity markets will trade lower, which will likely spill over to the ASX.
Investors looking to profit from a lower XJO 200 or SP 500 can look to buy the BetaShare ETFs with the Symbol BBOZ or BBUS.
Both of these are inverse ETFs, which means that the unit price will increase as the indexes trade lower.
In addition, both of these ETFs are weighted, which means that a 1% change in the respective index translates to a 2.5% move in the ETF.
BBOZ is currently trading at $17.80, we calculate that the price would rise to $18.60 if the XJO 200 traded back to the June 8th low of 5620.
BetaShare ETF BBOZ
BetaShare ETF BBUS
Against a backdrop of rising interest rates, weaker economic data and political gridlock, the SP 500 is still trading within 1% of its all-time high price of 2451.
The US Federal Reserve has lifted the Fed Funds target three times since the SP 500 posted its pre-election low of 2025 on November 9th of last year.
The tightening of credit conditions combined with lower corporate loan growth has been a trigger for material corrections in US equity markets in the recent past.
Investors looking to profit from a fall in the SP 500 can look to buy the BetaShare ETF with the symbol: BBUS.
BBUS is an inverse ETF, which means the unit price will rise as the SP 500 Index trades lower.
BBUS is also weighted, so that a 1% move in the SP 500 Index translates to a 2.5% change in the unit price.
The unit price of BBUS is currently near the $7.00 level. We calculate that when the SP 500 trades back to the November low of 2025, the unit price of BBUS will be in the $10.75/ $11.00 area.
BetaShare ETF: BBUS