The last two weeks have been strong ones for the Exchange Traded Funds in our ETF Energy Trader portfolio.
Now that we’ve turned the page from May to June, let’s take a look at the five open positions in our portfolio – which is up 6.03% in just two weeks’ time – as well as our ever-growing list of Energy ETFs For You to Watch.
So let’s get started…
Jefferies TR/J CRB Wildcatters (WCAT) – up 9.1%
When I recommended you enter this position, I called it “a perfect investment in the oil industry that prevents you from any backlash against outsized profits from “Big Oil.””
The truth of the matter is that this remains a perfect investment for the New Energy Revolution.
This fund gives you upside exposure to the smaller – and sometimes little-known – companies whose entire existence depends on their ability to find oil & gas deposits in places where it was thought not to exist.
Should this fund continue to climb higher – a rate of nearly 10% every two weeks is likely not sustainable – we may take some of our profits off the table at some point and then buy on a pullback.
Keep your eyes open for an alert in the next 1-2 weeks should this opportunity present itself.
PowerShares Global Clean Energy Portfolio (PBD) – up 0.9%
The clean energy story, as you know, is enormous – but it’s also one that has been slow to develop.
The slow development of this trend may continue – perhaps for as long as the rest of 2011 – but that doesn’t change the fundamental story: the world’s demand for clean energy will continue to increase.
That means we’ll need to be patient with this fund – though it’s still very much a long-term buy and I’m convinced it will return to its previous $30 level – and continue to search for short-term clean energy ETFs that can bring quick profit potential.
Guggenheim Canadian Energy Income ETF (ENY) – up 5.4%
This fund is an investment in Canadian Royalty Trusts and oil-sands producers…and it climbed from the $14.50 level last August all the way to $24 in March.
We were able to buy on a dip earlier this month – at $20.93 – and we’ll continue to do that in order to continue loading up on this outstanding oil play when it pulls back below $20 again.
This fund combines the income and insurance that comes with a Canadian oil play while allowing us to take advantage of the continued supply/demand story that drives oil prices higher.
IQ Global Oil Small-Cap ETF (IOIL) – up 4.95%
This brand-new ETF – launched in early May – has been mostly sideways in its infancy, but it provides us with great exposure to small-cap oil companies.
Small-caps are often ignored by analysts at large institutional firms…and that provides great opportunity.
But who wants to invest using the needle-in-a-haystack approach?
Should even just a few of the small-caps in this ETF begin to take off, they’ll deliver profits to you of 25% or more – without the risk associated with investing in individual companies.
Nothing has changed in the first few weeks of this fund’s existence to make it any less compelling to energy investors like us.
Market Vectors Coal ETF (KOL) – up 5.14%
This fund -- Market Vectors Coal ETF – is perfectly positioned to benefit from the continued heavy demand for coal across the world.
A look at the long-term chart will show that this fund once traded as high as $57.60, but it took a nasty fall in 2008 – all the way to $11 – as coal prices tumbled.
That’s not a concern today as the fund nears the $50 level once again.
China’s demand for coal alone is enough to keep pushing prices higher…and this fund will provide us with steady profits as that trend continues.
ETF Energy Trader Watch List
SPDR S&P Oil & Gas Equipment & Services (XES) – closed Tuesday at $41.98
This fund was added to our Watch List one week ago – on May 24 – when it was trading at $39.
We were looking for a pullback to the $37 level to take a position, but instead the fund has climbed to $41.98 in the last week.
Given the fact that demand for oil will continue for the foreseeable future…the energy service companies – which this fund represents – will be in big demand.
Buying XES – even at today’s price – is a sound investment. But we’ll continue to wait for that pullback before officially adding this fund to our portfolio.
We’ve just seen a short, one-week gain of 7.5% -- and there will be more opportunities ahead for us to grab short-term profits of 20% or more in the weeks ahead.
SPDR Utilities Select Sector Fund (XLU) – closed Tuesday at $33.87
I’m adding this fund to our watch list today, as we now head into the beginning of summer…and I expect the U.S. stock market to begin its inevitable pullback in the weeks ahead.
Utilities have traditionally been a great play in the face of a declining market – and in this case, there’s a strong fundamental case to be made for utility stocks to continue climbing higher in the next six weeks.
Let’s take advantage of XLU – a widely popular ETF provides us with attractive yields of 3.8% and great upside potential should utility stocks continue climbing.
I’m adding this fund to the Watch List today as it’s trading near its 3-month high of $34.20. But depending on what happens in the stock market before this week ends, I may issue a Buy signal at any price…so please stay tuned.
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