An ETF You Can Bank on in 2011
by Sam Collins | December 23, 2010 12:01 am
ProShares Ultra Financials ETF (NYSE: UYG[1]) — This exchange -traded fund (ETF) seeks daily investment results that correspond to twice the daily performance of the Dow Jones U.S. Financials Index.
On March 10, with the stock trading at $63, the Trade of the Day[2] said, “Following a period of very high accumulation, this ETF appears to be breaking from a triangle[3] with supporting evidence of the break coming from the crossing of the 50-day moving average[4] by the 20-day moving average. If successful, the target for a trade in UYG is $72.50 to $75.
By mid-April, UYG hit $78, and we advised taking profits. By July, the stock had fallen to under $50. Since then, UYG has formed a strong double-bottom[5]
at $48 and is trading within a bull channel following a huge breakout in September.
UYG could be a leader in 2011 with a target of over $75. But it is at the top of its channel and could pull back to below $62, which is our buy point.
The SEC has determined that “ultra” funds are not good long-term investments and are most appropriate for short-term trades. Leveraged ETFs carry greater risk than ordinary ETFs, so traders should use stop-loss orders. Finally, the margin requirement for most leveraged ETFs is 100%, but check with your broker before entering an order.
If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net[6].
- UYG: http://studio-5.financialcontent.com/investplace/quote?Symbol=UYG
- Trade of the Day: https://investorplace.com/6020/stock-picks-proshares-ultra-financials-uyg/
- triangle: https://investorplace.com/11097/technical-analysis-101-triangles/
- moving average: https://investorplace.com/225/how-moving-averages-work/
- double-bottom: https://investorplace.com/11091/double-bottom-and-double-top/
- samailc@cox.net: mailto:samailc@cox.net
Source URL: https://investorplace.com/2010/12/trade-of-the-day-proshares-ultra-financials-etf-uyg/