ERX: Turbocharging The XLE

seekingalpha04-09

J Studios Nearby NYMEX crude oil prices (CL1:COM) closed 2023 at $71.65 per barrel, with the Brent benchmark on the Intercontinental Exchange at $77.08 per barrel. At near $86.50 on the active month ...

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At near $86.50 on the active month ...</p>\n\n<a href=\"https://seekingalpha.com/article/4682743-erx-turbocharging-the-xle\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>ERX: Turbocharging The XLE</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nERX: Turbocharging The XLE\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-04-09 04:46 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4682743-erx-turbocharging-the-xle><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>J Studios Nearby NYMEX crude oil prices (CL1:COM) closed 2023 at $71.65 per barrel, with the Brent benchmark on the Intercontinental Exchange at $77.08 per barrel. At near $86.50 on the active month ...</p>\n\n<a href=\"https://seekingalpha.com/article/4682743-erx-turbocharging-the-xle\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4585","symbol_name":"ETF&股票定投概念","start_time":0,"source_url":"https://seekingalpha.com/article/4682743-erx-turbocharging-the-xle","article_id":"2426788414","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1771880684/image_1771880684.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2426788414","pubTimestamp":1712609168,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"J Studios Nearby NYMEX crude oil prices (CL1:COM) closed 2023 at $71.65 per barrel, with the Brent benchmark on the Intercontinental Exchange at $77.08 per barrel. At near $86.50 on the active month N","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4585":"ETF&股票定投概念","BK4588":"碎股","BK4570":"地缘局势概念股","FDN":"First Trust Dow Jones Internet I","ERX":"二倍做多能源ETF-Direxion","BK4550":"红杉资本持仓","XLE":"SPDR能源指数ETF"},"translate_title":"ERX：涡轮增压XLE","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ERX":1,"XLE":1,"FDN":0.9},"content_text":"J Studios Nearby NYMEX crude oil prices (CL1:COM) closed 2023 at $71.65 per barrel, with the Brent benchmark on the Intercontinental Exchange at $77.08 per barrel. At near $86.50 on the active month NYMEX contract and over $90.50 on the Brent contract in early April 2024, the crude oil benchmarks posted double-digit percentage gains in 2024 after falling by over 10% in 2023. The Energy Select Sector SPDR® Fund ETF (XLE) is riding a bullish trend, holding a portfolio of the leading U.S. oil and oil-related companies. With a value of over $98 per share in early April, XLE experienced a double-digit percentage gain in 2024, indicating a positive outlook for the sector. The Direxion Daily Energy Bull 2X Shares ETF (NYSEARCA:ERX) product presents a unique opportunity to amplify the upside price action in the XLE through leverage. Leverage means potential gains could be significantly higher than those from a direct investment in XLE. However, it's important to note that this leverage also comes with a potential downside-time decay. When the XLE experiences a downturn, ERX will amplify the losses. Additionally, even a stable XLE can lead to losses as time decay gradually erodes the leveraged ERX's value. Please fully understand the risks of leveraged ETFs before placing any trades. Crude oil prices are trending higher NYMEX WTI crude oil futures posted a 16.08% gain in Q1 after falling 10.72% in 2023. Monthly NYMEX WTI Crude Oil Futures Chart (Barchart) The monthly chart highlights that the nearby contract settled at $83.17 at the end of Q1. At $86.57, the energy commodity was over 4% higher in early Q2. Monthly Brent Crude Oil Futures Chart (Barchart) Nearby ICE Brent North Sea crude oil futures posted a 13.45% gain in Q1 after falling 10.18% in 2023. The Brent futures closed Q1 at $87.45 per barrel. At $90.55 on April 8, they were 3.5% higher in early Q2. Higher crude oil prices mean more revenues and profits for the leading oil-related companies. The case for higher highs over the coming months The following factors favor a continuation of higher highs in WTI and Brent futures over the coming months:   Seasonality- The driving season begins in spring and runs through summer, the peak season for gasoline demand. Increased gasoline consumption tends to raise fuel prices and the leading ingredient, crude oil.  Geopolitics- Wars in Ukraine and the Middle East pose significant threats to production, refining, and critical logistical routes. The escalating tensions between Israel and Iran could cause disruptions in petroleum supplies.  OPEC+ - The international oil cartel extended production cuts until June 2024, limiting output as oil prices increase. Meanwhile, Russia is the leading non-cartel member in participating in output quotas and cooperating with OPEC policies. Russia and Saudi Arabia cooperate to achieve the highest possible crude oil price.  SPR- The U.S. SPR declined by around 40% from over 600 million barrels in late 2021 to 363.6 million barrels as of the end of March 2024. The Biden administration sold SPR barrels to cap prices when they rose over $130 in 2022. While the administration pledged to replenish the SPR when prices fell to a $67 to $72 range, they missed the opportunity in late 2022 and throughout 2023 when prices were within the target band and below. The low level of the U.S. SPR prevents the U.S. from selling additional barrels if crude oil prices eclipse $100 over the coming months.  The trend - The trend in any market is always your best friend. Oil prices have been trending higher since December 2023.  These factors present a compelling case for higher oil prices over the coming months. Uncertainty after early November In a February 2, 2024, Seeking Alpha article, I highlighted how the upcoming November U.S. election will shape future energy policy when writing about the oil services sector:  The Biden administration has supported addressing climate change by promoting alternative and renewable fuels and inhibiting fossil fuels since it took office in early 2021. One of the administration's first moves was to cancel the Keystone XL pipeline. Former President Trump and his administration followed a \"drill-baby-drill\" and \"frack-baby-frack\" policy to achieve energy independence. The upcoming November election will likely be a repeat of the 2020 contest. Democrats favor a continuation of the current energy policy, while Republicans support a return to Trump-era policies. Hydrocarbons and climate change initiatives will be significant debate topics over the coming months.  According to the EIA, U.S. output has increased to 13.1 million barrels daily. However, OPEC output policies and the other factors underpinning worldwide energy demand will likely keep crude oil prices on an upward path until the November election, which is seasonally when crude oil prices decline. A bullish trend in XLE WTI and Brent Crude Oil prices were up 16.08% and 13.45%, respectively, in Q1. On April 8, they were another 4% and 3.5% higher than the Q1 closing levels. Monthly XLE ETF Chart (Barchart) The monthly chart highlights XLE's 12.6% rise from $83.84 at the end of 2023 to $94.41 per share on March 28, 2024. At $98.08 on April 8, the XLE ETF was 3.9% higher in the early days of Q2. XLE's top holdings include: Top Holdings of the XLE ETF Product (Seeking Alpha) XLE owns shares of the leading U.S. petroleum-related publicly traded companies. At $98.08 per share, XLE had $41.62 billion in assets under management. XLE trades an average of nearly 16 million shares daily and charges a 0.09% management fee. Rising oil prices are bullish for the highly liquid ETF product, which posted a double-digit percentage gain in Q1 and is higher in early Q2. ERX turbocharges XLE, but the leverage comes at a price Rising oil prices translate to higher revenues and increased profits for oil companies. The Direxion Daily Energy Bull 2X Shares ETF product is the XLE on steroids. ERX's fund profile states: Fund Profile for the ERX Leveraged ETF Product (Seeking Alpha) ERX's holdings as of April 3, 2024, included: Top Holdings of the ERX Leveraged ETF Product (Seeking Al;pha) At $76.33 per share, ERX had $439.40 million in assets under management. ERX trades an average of nearly 580,000 shares daily and charges a 0.93% management fee. Chart of the ERX Leveraged ETF Product (Barchart) The chart shows ERX rose 25.2% from $56.57 to $70.80 per share in Q1. At $76.29 in early Q2, ERX was 7.8% higher. ERX has delivered around twice the XLE's percentage gain during the periods. ERX is a leveraged product, and the gearing price is time decay. The monthly chart highlights the downward-slopping price action. In March 2020, when crude oil fell below zero and oil companies' shares plunged, ERX experienced a 1:10 reverse split. The bottom line is the price for magnifying the price action in XLE on the upside, which is significant underperformance if the XLE corrects lower or trades in a sideways range.  Timing is critical when approaching any market with a leveraged product. In early April 2024, the case for rising crude oil is compelling. Higher crude oil prices will support earnings for the leading oil companies and the XLE, which makes ERX an attractive product for short-term long-risk positions. However, leverage requires unique risk-reward dynamics, including price and time stops, to protect capital.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2426788414"}