Historically, the best stocks show huge price and volume strength and feature fundamental growth along with a leading spot in the marketplace, which is also true for exchange traded funds(ETFs). The Oil and Gas Machinery/Equipment groups run-up began in 2004 after recovering from a three-year, 36% correction. Alan R. Elliot for Investor’s Business Daily reports about this trading pattern and the same pattern can be seen among the stocks found in the following ETFs:
With the price of gas rising, people are looking for ways to save at the pump, but there are ways to use exchange traded funds (ETFs) to offset what you are putting in the car. There has been a run-up in the oil and gas equipment and services area. In order to get the gas to your car, these companies become important. There are several ETFs that cover this area and have done well so far this year, especially compared to the ETFs priced to the barrel of oil. The spot price of oil is up about 6% for the year.
- Oil Services HOLDRs (OIH) includes companies such as Schlumberger (SLB), Transocean (RIG) and Halliburton (HAL); this ETF is up 22% this year.
- iShares Dow Jones U.S. Oil and Gas Exploration & Production (IEO) top holdings are Occidental Petroleum (OXY), Valero Energy (VLO) and Devon Energy (DVN); IEO is up 23%.
- iShares Dow Jones U.S. Oil Equipment (IEZ) Schlumberger is the largest holding of this ETF at 22%, other companies include Halliburton at 9% and Baker Hughes (BHI) at 7%; IEZ is up 24% year-to-date.
- United States Oil (USO) is an ETF that invests in oil futures; USO is down 7% year-to-date.
For full disclosure, some of Tom Lydon’s clients own IEZ.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.