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A number of inverse ETFs seek to deliver returns that are multiples of the benchmark, or of the benchmark's inverse. For example, the ProShares UltraShort Russell2000 (TWM) seeks to deliver a return that corresponds to twice the inverse of the Russell 2000 Index. These funds accomplish this objective by deploying a number of complex investment strategies, often involving leverage.2

Usually, investment capital held in the legal trust underlying each inverse ETF is not invested directly in the securities of the associated index's constituents, unlike long-oriented ETFs. Also, assets not currently invested in derivatives or securities are frequently invested in short-term debt and/or money market instruments. The yields associated with these debt instruments contribute to the portfolio's total return and can be used as collateral (margin) for open derivative positions.

Vulcan's strong quarterly results saw buyers step up to the plate in leading names across the sector. Let's look at possible swing trading opportunities in two other leading building materials stocks.

Vulcan's share price gapped above a key resistance area at the $107.50 level on above-average volume to close comfortably above the 200-day simple moving average (SMA). Aggressive traders who want to play the breakout should look for a move up toward the June swing high at $132.89 with a stop-loss order positioned below yesterday's low. More conservative traders may wait for a retracement to the initial breakout area before entering. Those taking this approach should use a similar profit target but place a stop below the February swing low.

The ERX share price fell off a cliff in the fourth quarter of 2018, following oil prices sharply lower. The fund bottomed in late December on climactic volume and has since tracked higher with only minor retracements. Those who wish to ride the upward momentum should enter on dips to $22, where the price finds a confluence of support from a two-month uptrend line and 20-day SMA. Traders could set take-profit orders at key resistance levels such as $26 and $32. Close open positions if the price falls much below the trendline, as this invalidates the short-term momentum setup.

The Direxion Daily Energy Bull 3X ETF (ERX), with net assets that exceed $400 million, aims to return three times the daily investment results of the Energy Select Sector Index. Energy sector heavyweights Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX) dominate the underlying index, carrying a cumulative weighting of 41.75%. Tight spreads and deep liquidity make this ETF an energy trader's favorite. The fund yields 2.29% and has an expense ratio of just over 1%. As of Feb. 28, 2019, ERX has returned 46.27%.

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