Crude Oil, HOU and HOD ETFs

Someone asked me about investing in oil the other day. I am not going to be doing so but I do watch other charts and markets seeing as I have to buy gas and it affects almost every facet of life somehow. So one method of offsetting the additional costs of oil induced increases is to own oil stocks that pay when the oil price is high. Dividends are nice but not necessary...in my view.

So, this brings me around to another of the Exchange Traded Funds (ETF).

The short story is that these funds track the sector, or commodity they are named for.

Horizons BetaPro NYMEX Crude Oil Bull Plus ETF... or HOU.TO.


This is a fairly new fund so the 200sma is just getting going, les thana year old. I circled the nicest positive divergence you could ask for. The price is levelling out and the MACD has been steadily rising since October. Personally I would give this one another chance for a pullback before buying in but if a little risk is in the books then it could be purchased now too. Perhaps scale into the investment.

The nice thing about this is there is little fear of the underlying company doing anything weird (Enron anyone?) as there is no underlying company.

Here is a zoom in of the main activity lately...

It looks to me like $10 is about as low as it can go...but that certainly is not a guarantee. Once the red 30sma crosses the blue 50sma I would consider it back in the bullish territory...by then the price could be back up to $20 quite easily. The trick is whether it will stay up or not. As a position trader I would not wait quite that long anyway...one more low to see where the support really is then it would be time to read the chart again. Anything under $10 would be worth the risk for a small position.

This brings back memories of the CTP strategy.

As I will be day trading my full account I don't even have room to sneak 100 shares of this ETF or I just might...although if it drops to $10 even, again, it would certainly be doable, I'd make it work for that.

Here is the inverse ETF, Horizons BetaPro NYMEX Crude Oil Bear Plus ETF... or HOD.TO

This is for those who want to play against oil climbing.

Jeff.