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Nov 21, 2018

Energy ETF (ERX) Flashes Possible Bullish Sign

The dramatic fall in oil prices over the last few weeks has garnered a lot of attention from the financial media. Oil prices dropped for 12 straight days which marked a record losing streak.

There were numerous factors behind the decline—supply and demand imbalances, political pressure, and production level disagreements are just a few.

Regardless of how things play out in the long run, there is a short-term pattern on the chart of the Direxion Daily Energy Bull 3X Shares (NYSE: ERX) that suggests a bounce may be in the works.

The fund dipped down to the $22 level on Thursday and then moved higher later that day and on Friday as well. The $22 area served as a low on October 29 and seeing these two low points in close proximity indicates a possible double-bottom pattern.

For the pattern to be confirmed, the fund would need to move above the high in between the two lows. In this case the high came at $29.05 on November 8. If the ERX does bounce back above the previous high, it would mean a 15.6% gain from the close on Friday.

One thing to keep in mind with the ERX is that it is a triple-leveraged ETF and that leverage works in both directions. If the energy sector moves up 1%, the ERX should move up 3%. If the energy sector moves down 1%, the ERX should move down by 3%. At least that is how the fund is designed to work.

Something I have noticed about the ERX is that the 3-to-1 leverage doesn’t hold up as well over the long run as it does on a day to day basis. The 3-to-1 relationship holds up much better over the short term. If you are going to invest in the ERX, you should be aware of this relationship.

Related Ticker: ERX

ERX in +2.98% Uptrend, advancing for three consecutive days on March 19, 2024

Moving higher for three straight days is viewed as a bullish sign. Keep an eye on this stock for future growth. Considering data from situations where ERX advanced for three days, in of 332 cases, the price rose further within the following month. The odds of a continued upward trend are .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Aroon Indicator entered an Uptrend today. In of 248 cases where ERX Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .

Bearish Trend Analysis

The RSI Indicator demonstrates that the ticker has stayed in the overbought zone for 12 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

The Stochastic Oscillator demonstrated that the ticker has stayed in the overbought zone for 14 days. The longer the ticker stays in the overbought zone, the sooner a price pull-back is expected.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where ERX declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

ERX broke above its upper Bollinger Band on March 13, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Fear & Greed

Notable companies

The most notable companies in this group are Exxon Mobil Corp (NYSE:XOM), Chevron Corp (NYSE:CVX), ConocoPhillips (NYSE:COP), Schlumberger Limited (NYSE:SLB), EOG Resources (NYSE:EOG), MARATHON PETROLEUM Corp (NYSE:MPC), Phillips 66 (NYSE:PSX), Pioneer Natural Resource Co (NYSE:PXD), Occidental Petroleum Corp (NYSE:OXY), Valero Energy Corp (NYSE:VLO).

Industry description

The investment seeks daily investment results of 200% of the daily performance of the Energy Select Sector Index. The index is provided by S&P Dow Jones Indices and includes domestic companies from the energy sector which includes the following industries: oil, gas and consumable fuels; and energy equipment and services. The fund invests at least 80% of its net assets in financial instruments, such as swap agreements, securities of the index, and ETFs that track the index, that, in combination, provide 2X daily leveraged exposure to the index, consistent with the fund's investment objective. It is non-diversified.

Market Cap

The average market capitalization across the Direxion Daily Energy Bull 2X ETF ETF is 88.93B. The market cap for tickers in the group ranges from 10.17B to 456.18B. XOM holds the highest valuation in this group at 456.18B. The lowest valued company is APA at 10.17B.

High and low price notable news

The average weekly price growth across all stocks in the Direxion Daily Energy Bull 2X ETF ETF was 3%. For the same ETF, the average monthly price growth was 18%, and the average quarterly price growth was 5%. EQT experienced the highest price growth at 7%, while VLO experienced the biggest fall at -1%.

Volume

The average weekly volume growth across all stocks in the Direxion Daily Energy Bull 2X ETF ETF was -10%. For the same stocks of the ETF, the average monthly volume growth was -8% and the average quarterly volume growth was -25%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 61
P/E Growth Rating: 38
Price Growth Rating: 34
SMR Rating: 44
Profit Risk Rating: 38
Seasonality Score: 6 (-100 ... +100)
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ERXDaily Signal changed days agoGain/Loss if shorted
 
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General Information

Category Trading

Profile
Fundamentals
Details
Category
Trading--Leveraged Equity
Address
Direxion Shares ETF Trust33 Whitehall Street,10th FloorNew York
Phone
866-476-7523
Web
http://www.direxioninvestments.com/
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