This ETF goal is to provide investment results that correspond to twice (200%) the inverse of the daily performance of the Bloomberg WTI Crude Oil SubindexSM.
ProShares UltraShort Bloomberg Crude Oil (SCO)
From Stock Trader’s Almanac
Over the last year, crude oil has enjoyed a solid run beginning just under $50 per barrel early in September 2017 to over $75 per barrel in July of this year. The rise in price has caused an increase in domestic production which is likely to put a cap on further price appreciation. A stronger U.S. dollar could also hinder further gains. Tariffs could also result in lower crude oil prices as growth could be hit. Easing demand and ample supply would suggest lower prices for crude in the near future could be likely.
[ProShares UltraShort Bloomberg Crude Oil (SCO) Daily Bar Chart]
ProShares UltraShort Bloomberg Crude Oil (SCO) is one vehicle to take advantage of seasonal weakness. SCO’s benchmark is the Bloomberg WTI Crude Oil Sub index which is comprised entirely of crude oil futures contracts. SCO is designed to return 200% of the inverse of the daily move of this index and has nearly $160 million in assets. Its expense ratio of 0.95% is about average for a leveraged, inverse ETF.
Crude oil’s recent weakness has caused a corresponding increase in SCO. As a result, stochastic, relative strength and MACD Buy indicators are all positive. SCO could be bought on dips below $15.55. SCO will be tracked in the Almanac Investor ETF Portfolio. If purchased, an initial stop loss at $14.00 is suggested.
Jeffrey A. Hirsch, Stock Trader’s Almanac, www.stocktradersalmanac.com, 800-762-2974, September 6, 2018