I have been keeping a close eye on the Direxion Daily Energy Bull 3x ETF (ERX) as of late. Below is a weekly chart of ERX, showing whats commonly referred to as a massive cup & handle formation. On Friday, I bot ERX 1/2 position at 53.93 – however, I would really like to get long a full position on a move above 62. A move above 62 would confirm the cup & handle breakout.
Also, The PPT stats for this ETF are impressive. When ERX flags TechOS (1.74) in the last 3 months, it has returned an average of 10.14% on a 10 day hold, 2-2 (or 100%) times. When reaching TechOS on the 6 month indicator, ERX has been up an average of 14.47% on a 10 day hold, 8-8 (or 100%) times. Finally the 12 month time frame shows an average return of 12.5% on a 10 day hold, 10-10 (or 100%) times. November is also a bullish month for this ETF – Its safe to say The PPT has this one nailed.
Keeping with the energy theme, I am also interested in the Market Vectors Coal ETF (KOL). As you can see, KOL, may be trying to put in a bearish to bullish reversal here, carving out what looks to be an inverse head and shoulders pattern. We are at a fairly critical juncture here with KOL approaching the neckline of the pattern. Watch for a CLOSE above 26.40 with a substantial uptick in volume (for bottoming patterns, one should see a noticeable inflow of capital on the neckline breakout). Even if this isn’t a long term bearish to bullish reversal, it should shift the short/intermediate term trend in favor of the bulls.
The election should play a large roll in the future of KOL as well. There are two scenarios that may unfold, that is — 1) R-Money wins and KOL rips, 2) Obama wins and KOL resumes its death spiral to an almost certain regulatory purgatory or death.