This one is pretty simple. I don’t think this ETF can go any higher, and I don’t think oil/market will hang onto early gains they are posting in pre-market. There is not really much news except a Chevron buy of Atlas Energy out there to give a bull run. We were in a bear run starting yesterday on very high valuations and runups in oil, stocks, gold etc. A pullback even further is still in order, and oil should be giving up any gains it has currently and even more.
Direxion’s Daily Energy Bull ETF (ERX) has been a #1 beneficiary of the large bull market we had last week and oil’s run. The ETF has moved up 30% in the last month without much downward movement whatsoever. The ETF is now jumped outside of its upper bollinger band, is completely overbought, and has an RSI near the 70 red alert level. Oil is just too overvalued, and it should make some movement downwards.
Get in early as this ETF will be dropping and we want to short or buy some puts!
Entry: We are looking to short at 45.60 – 45.80.
Exit: We are looking to cover at 2-3% drop.
Stop Buy: 3% on top.