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Direxion Energy Bull 2X Shares (NYSE:ERX) gapped down 10.42% to start the trading day on Wednesday. The ETF was erasing some of its losses in the afternoon, trading about 8% lower.
The energy sector had been enjoying a long bull cycle that began Dec. 31, 2021 and gained steam in February following Russia’s invasion of Ukraine and the oil embargoes that followed. The cycle ended on June 8 when Exxon topped out at the $105.57 mark, causing ERX begin to plummet from its 52-week high of $80.27.
ERX is a double leveraged fund that is designed to outperform companies held in the S&P Energy Select Sector Index by 200%. The index includes a variety of energy related stocks, with two giants, Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX), making up 43.78% of its weighted holdings.
A few other top 10 names in the ETF include EOG Resources, Inc (NYSE:EOG), weighted at 4.78%; ConocoPhillips (NYSE:COP), weighted at 4.56%; and Schlumberger N.V. (NYSE:SLB), which is weighted at 4.39% within the ETF.
It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to a long-term investment.
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The ERX Chart: ERX has been trading in a downtrend since June 8, with the most recent lower low formed on June 17 at $47.93 and the most recent lower high created at the $54.96 mark on the day that followed.
On Wednesday, ERX fell near to the last lower low and bounced up from the level, which formed a possible bullish double bottom pattern on the ETF’s chart.
See Also: What's Going On With Exxon Mobil, Marathon Oil, BP And Shell Shares Today?
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