Saturday, March 6, 2010

The Best Oil ETFs to Buy and to Sell; Profitting From Oil Going Up or Down

Oil has passed $80. At those levels it will choke whatever little economic recovery we have. However, shall the US dollar continue to drop, oil will rise further.

As readers here now, we track all oil ETFs live as one of our Tracking Live sites. The most common ETFs we use are USO and UCO, but that site lists all of them:

Daily charts:

Performance since Jan 2009:

We also track the relative strength values of all these ETFs. Here the are, ordered by a short time frame indicator (RSI daily):

There is one oversold ETF, DUG, which is an ultra short on the oil companies. It is also the most oversold ETF in the longer time frame (monthly)

The top three most oversold ETFs are UGA (gasoline), DIG (the ultra long version of DUG), and OIH (oil-related companies).


Whether oil goes up or down, straddles allow investors to profit either way, as long as the underlying stock moves. Here are straddles for both USO and UCO:

UCO is cheaper to buy and requires less than 2X the move of USO. That is why we prefer it. However, as always, options are very dangerous and may cause 100% loss. Computed with our StraddlesCalc Tool.
Note: You may receive technical analysis and alerts of these stocks, sent automatically to you, by entering the symbols in the Technical Trend Analysis Tool, (powered by INO).

Please do your own due diligence.

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