In recent sessions a leveraged ETF that focuses on the Energy equities space has seen substantial asset inflows via creations.
Direxion Daily Energy Bull 3X (NYSEArca: ERX) has reeled in more than $50 million in recent sessions (equivalent to nearly 20% of the assets outstanding in the fund) and trading volume remains above average levels.
The product tracks the Russell 1000 Energy Index and delivers three times the daily returns to that index. Currently, top holdings in the Russell 1000 Energy Index are (XOM, CVX, SLB, COP, and OXY).
Designed as a short term trading and/or hedging vehicle, the product will likely appeal to technically based short term traders that believe that the Energy sector is “breaking out,” and may have a uni-directional move to the upside in a short term setting.
Surely, crude oil prices continue to flirt with recent highs and some may believe that equities that derive revenues from the sale of crude oil and related fuels will continue to rally if oil the commodity continues to surge going into the summer.
For example, year to date, PowerShares DB Oil (NYSEArca: DBO) has rallied 8.72% while a prominent U.S. based energy equities ETF, SPDR Energy Select (NYSEArca: XLE) is up 5.30%.
Furthermore, in the trailing one year period, XLE is down 7.49% vs. DBO down 2.69%, and in the trailing 5 year period, performance for both funds is roughly even (DBO +21.14%, XLE +20.89%).
From a technical standpoint it looks like ERX is running into congestion, as it recently found support on its 200 day moving average ($52.53) but there is overhead resistance nearby in its 50 day moving average of $54.42.
Direxion also offers a similar product for “Energy Bear” traders/hedgers whom may be looking to take a bearish trading stance in the Energy equities space, and the fund is Direxion Daily Energy Bear 3X (NYSEArca: ERY).
Direxion Daily Energy Bull 3X
For more information on Street One ETF research and ETF trade execution/liquidity services, contact pweisbruch@streetonefinancial.com.
