Oil Prices Rise As Concerns Over Supply Grow Amid Middle East Unrest: This Fund Offers 2X Leverage To Play The Sector Bullishly

Author: Melanie Schaffer | October 16, 2023 11:27am

Direxion Daily S&P Oil & Gas Exp & Prod Bull 2X Shares (NYSE:GUSH) was rising about 0.8% higher on Monday, continuing its rally amid increased geopolitical conflict, which caused International Monetary Fund Managing Director Kristalina Georgieva to express concerns over.

Instability in the Middle East, an area responsible for roughly one-third of global oil production, could disrupt supplies, causing prices to surge, which is bullish for GUSH.

On Oct. 12, Benchmark analyst Subash Chandra maintained a Buy rating on Marathon Oil Corporation Corp (NYSE:MRO) and dropped a price target from $32 to $28. On the same day, several analysts maintained bullish ratings on Exxon Mobil Corp (NYSE:XOM) with two analysts raising their price targets.

GUSH is a double-leveraged fund designed to outperform companies held in the S&P Oil & Gas Exploration & Production Select Industry Index by 200%.

A few of the most popular companies held in the ETF are Exxon, which is weighted at 1.34% within the ETF; Occidental Petroleum Corporation (NYSE:OXY), weighted at 1.37%; and Marathon Oil, weighted at 2.36%.

It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to long-term investments.

For traders looking to play the oil and gas sector bearishly, Direxion offers the Direxion Daily S&P Oil & Gas Exp & Prod Bear 2X Shares ARCA: DRIP).

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The GUSH Chart: On Oct. 11, GUSH negated a downtrend by forming a higher low and on Friday, the ETF created a higher high, confirming a new uptrend. GUSH also regained the 50-day simple moving average on Friday after holding above the 200-day SMA, which Benzinga called out was likely on Oct. 10 and is bullish for the longer term.

On Monday, GUSH briefly popped above Friday’s high-of-day before falling back into that trading range. The price action has settled the ETF into an inside bar pattern on the daily chart, which leans bullish for continuation.
Bullish trades want to see big bullish volume come in and push GUSH significantly north of Friday’s closing price. Bearish traders want to see big bearish volume come in and drop the ETF down under the 50-day SMA, which could accelerate downside pressure.
GUSH has resistance above at $4139 and at $44.73 and support below at $37.11 and at $33.15.