We took a speculative short position on the US financial sector a couple of weeks ago, via an inverse ETF called Ultra Short Financials ProShares (AMEX:SKF). As an inverse ETF, this investment will go up when the US Financial sector goes down, with a leverage of 2:1. For more details on how this work, please read our article entitled “A Bet Against The Banks”.

Since we bought SKF at $110.36, the financials have continued to suffer and so our investment has risen to $119.27, a gain of just over 8% in two weeks.

Do we see SKF continuing to make gains? The answer is Yes – simply because we do not see a major upswing coming in the financial sector for some time. The market will occasionally get a boost from a Ben Bernanke interest rate cut, but the success is usually short lived, and the Fed cannot cut rates forever.

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