Keeping an Eye on Energy

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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.

One Response to “Keeping an Eye on Energy”

  1. The price of coal should be highly influenced by the price of natural gas (it’s main competitor).

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