Exchange traded funds that track crude prices have rallied about 10% over the past week, which has provided a lift for a beaten-down ETF tracking the global shipping sector.
Last week, we pointed out a rally in oil ETFs on higher-than-normal trading volumes. [ETF Chart of the Day: Oil]
A related ETF on the equity side is Guggenheim Shipping ETF (NYSEArca: SEA), which also has rallied recently off of its lows to close up nearly 5% during Monday’s session alone.
Volume has also been considerably heavy in recent sessions in SEA, as the fund typically trades only 73,000 shares on an average daily basis but has registered several trading sessions in the past week of several hundred thousand shares apiece.
SEA tracks the Dow Jones Global Shipping Index and many of the holdings have significant exposure to the transportation of oil, as well as other goods and materials, so we generally watch SEA in tandem with the crude oil related exchange traded products.
That said, it is not surprising that as crude oil prices have dropped in recent months SEA has also fallen notably. [Shipping ETF: Lost at SEA?]
Likewise, the recent rally in crude has coincided with a broad based equity rally and generally a slight restoration in hopes that the global economy will improve, which generally has had positive effects in the past on crude prices amidst healthy consumer demand.
While SEA has popped off of its recent lows, it still remains notably below both its 50 and 200 day moving averages, so we will continue to monitor crude oil’s near term price direction to determine if it is the beginning of a new trend or simply a bear market rally.
Year to date, SEA has fallen 46.65% and top holdings are currently Mitsui O.S.K., Nippon Yusen, SembCorp Marine Ltd., Cosco Pacific Ltd. and Kawasaki Kisen Kaisha, Ltd.
Guggenheim Shipping ETF
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