Top 7 Trades for December

Top Stock #7: UltraShort SmallCap 600 ProShares (SDD)

30 Dead Dividend Stocks to Avoid At All Costs

The UltraShort SmallCap 600 ProShares (SDD) seeks daily results, before fees and expenses, that correspond to twice the inverse of the daily performance of the S&P SmallCap 600 Index (SML). This is a speculative, double-leveraged ETF that is primarily suited to day trading, but could be good for a three- to four-week trade now.

In the past couple of weeks, mutual fund managers have appeared to be locking in their gains (and bonuses) by selling the lower quality or highly volatile stocks in favor of safer investments, so both mid- and small-cap stocks could be vulnerable to further pullbacks. This ETF could be a way to cash in on further pullbacks in those stocks.

But be sure to check for any special margin requirements and, recognizing the high risk of this trade, place a stop-loss order at the time of execution. A break above $35 could result in a quick move to $45 to $50. Stops should be entered at $27.75.

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