Update on ProShares Ultra Basic Materials ETF

Sep.29.09 | About: ProShares Ultra (UYM)

ProShares Ultra Basic Materials ETF (AMEX: UYM)

Originally recommended on December 15, 2008 (IWB #2844) at $14.46.

Closed Friday at $26.45. (All figures in U.S. dollars.)

The price of this leveraged ETF has been bouncing around like the proverbial yo-yo in recent days, reflecting the volatility in the materials sector. When I last reviewed it, in the issue of August 24, the shares were priced at $24.68 and I advised buying more. They slipped below that level for a while but then had a big upward move that began on September 1. On September 22, they closed at $30.03 but they have fallen back since then as commodity prices weakened.

At this point, we are ahead by 82.9% based on Friday's closing price. I think it is time to take some of that money off the table. In a leveraged ETF such as this, gains can vanish quickly in a down market. However, don't sell your entire position. If we get a big drop, say to the $20-$22 range, consider adding more at that time.

Action now: Take half-profits.