Benzinga - by Melanie Schaffer, Benzinga Editor.
Direxion Daily S&P Oil & Gas Exp & Prod Bull 2X Shares (ARCA: GUSH) was rising about 1.6% higher on Tuesday amid increased geopolitical conflict, which caused Morgan Stanley analyst Daan Struyven to weigh in on how the Israel-Hamas escalation could tighten oil supply.
On Oct. 4, UBS analyst Josh Silverstein raised the price target on Marathon Oil Corporation Corp (NYSE: MRO) from $35 to $37 and maintained a Buy rating on the stock. Exxon Mobil Corp (NYSE: XOM) and Chevron Corporation (NYSE: CVX) both had their price targets bumped higher earlier this month, further indicating analysts are bullish for the oil and gas sector.
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: After briefly losing support at the 200-day simple moving average (SMA) on Oct. 4, bulls came in and drove GUSH back up above that level, which suggests the ETF is trading in a bull cycle. Although GUSH regained the 200-day SMA and has risen over 12% from the area, the ETF hasn’t yet retraced to form a higher low.
- If GUSH eventually retraces above the 200-day SMA and prints a bullish reversal candlestick, such as a doji or hammer candlestick, the ETF’s current downtrend will be negated. For a new uptrend to confirm, the ETF will also need to print a higher high.
- GUSH may not retrace all the way to the 200-day SMA, however, because the ETF has a gap below between $35.35 and $36.24. If GUSH falls to close that gap, the lower range of the gap is likely to act as support and a bounce may come from that area.
- GUSH has resistance above at $41.39 and at $44.73 and support below at $37.11 and at $35.15.
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