Oil looks to be on the way down and I have a way you can
potentially take advantage of the opportunity with an inverse
exchange-traded fund (
First, I want you to take a look at the chart for the
United States Oil Fund (
As you can see, the forecast trend is lower for the next several
weeks. My other forecast charts show the entire U.S. market on a
downward trend (more of this in my
Mastering the Markets
With my data showing a possible decline in the price of oil, I have
selected an inverse
for this week's recommended trade. The fund is the
UltraShort DJ-UBS Crude Oil ProShares (
ETF. This fund is designed to generate approximately twice the
inverse daily performance of the Dow Jones AIG Crude Oil Sub-Index.
Owning shares of this ETF, in theory, means that as the price of
oil goes lower, the price of shares of this fund should move
I should note, however, that this complex securities product is
designed to meet its stated objectives on a daily basis. Its
performance over longer periods of time can differ significantly
from the performance (or inverse of the performance) of its
underlying index or
during the same period of time and this effect can be magnified in
Technically, the ETF is giving a buy signal, as it has just crossed
my 10-week, time-shifted trend line (blue line in the chart of SCO,
above). It trades in zone 1, which means it has an historical price
range that leaves most of the range above the current price. This
could provide SCO room to move higher with what appears to be more
upside opportunity than downside risk.
I find it very interesting that volume has been steadily declining
for weeks on lowering prices. This is exactly the kind of action I
look for when my time-cycle forecast is in the opposite direction.
This gives me the potential opportunity to buy shares of SCO on
sale. I will be looking to pick this ETF up on any oil rally.
Action to Take-->
Assuming no major flare-up occurs in the Middle-East, oil could
move quite a bit lower if my forecast charts are correct. Based on
this analysis, I think SCO is a good trade to put on with a target
price of $23.50 and an initial stop loss of $13.50. If I'm right,
investors could make a +47% return based on recent prices.
-- Mike Turner
A published author on the subject of trading, Mike Turner's
proprietary trading system has led him to a spectacular long-term
success rate. Mike is founder of a money-management... Read
Disclosure: Neither Mike Turner nor StreetAuthority, LLC hold
positions in any securities mentioned in this article.
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