Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X (GUSH)

[Mic ll]

Love this entry point, been following this for an oil play.

[pay streak]

Has been way oversold, plenty of more room to run higher

[MR Bucks]

No doubt! Looks like it still has some strong momentum too

[pay streak]

What a beast of a move lately

[MR Bucks]

Just hold on to GUSH and you'll have your double bagger.

Gitty UP!!!!!

[JohnCM]

CRUDE BOTTOM

NRGU 2.26
UCO 12.82
ERX 11.43
TOTAL 26.51

Last 2 weeks in May. That is when I will finish my buying.
Week of Apr 20 start small position
Week of Apr 27 continue total 1/6th
Week of May 4th at least 1/3 position
Week of May 11th major purchase 30%
Week of May 18th major purchase 30%
Week of May 25th finish purchase 6%

NRGU 3X 50% __________________________________________
UCO 2X 25% ____________________________________________
ERX 2X 25% _____________________________________________

2.5X

Conservatively WTI $15.00 to $25.00 Selling week of June 1st.

40% X 2.5X gives you a double (bagger).

[€LL-$G7$]

Hi johncm

Been reading your post on here and seems you know your stuff regarding this topic
Been looking at 3x long on oil but like you said most are wiping out or no longer trading....
Is this Gush the play..? I really cant find any or confused.
I appreciate any help sir

Thanks

[JohnCM]

I would like to look into the tankers.

DHT FRO

CRUDE BOTTOM

NRGU 2.26
UCO 12.82
ERX 11.43
TOTAL 26.51

Last 2 weeks in May. That is when I will finish my buying.
Week of Apr 20 start small position
Week of Apr 27 continue total 1/6th
Week of May 4th at least 1/3 position
Week of May 11th major purchase 30%
Week of May 18th major purchase 30%
Week of May 25th finish purchase 6%

NRGU 3X 50% __________________________________________
UCO 2X 25% ____________________________________________
ERX 2X 25% _____________________________________________

2.5X

Conservatively WTI $15.00 to $25.00 Selling week of June 1st.

40% X 2.5X gives you a double (bagger).

[Ole Broke Azz]

and when I am playing them that is generally what I do

not always but generally

same with the 2 dozen or so stocks that I trade regularly. work both sides

[JohnCM]

That's the beauty of an ETF. You have BULL and Inverse, without "shorting" a stock.

ETF Bull and Bear Discussion Board

[Ole Broke Azz]

I love it, I don't invest (especially in ETF's) so all of that is only icing on the cake for me

I love it when a company or an ETF tanks, usually means it will bounce at some point

[JohnCM]

Total destruction of value. Wow!!

[JohnCM]

[Ole Broke Azz]

my call would be because it was sold off as an over reaction to the plunge in oil... not that it wasn't warranted but I think the market is fickled and tips far to far in either direction

[JohnCM]

Why is GUSH taking off?

Index Sector Weightings %

Oil & Gas Exploration & Production 76.77
Oil & Gas Refining & Marketing 16.30
Integrated Oil & Gas 6.93

Index Top Ten Holdings %

WPX Energy 2.80
Whiting Petroleum 2.76
Apache 2.66
EQT 2.60
Callon Petroleum 2.52
Range Resources 2.50
Concho Resources 2.47
Noble Energy 2.46
Eog Resources 2.46
Devon Energy 2.46

The S&P Oil & Gas Exploration & Production Select Industry Index (SPSIOPTR) is provided by Standard & Poor's Index Provider and includes domestic companies from the oil and gas exploration and production sub-industry. The Index is designed to measure the performance of a sub-industry or group of sub-industries determined based on the Global Industry Classification Standards (GICS).

[Ole Broke Azz]

are you asking me why you didn't or are you asking me why you didn't

[JohnCM]

Why did I choose not to use GUSH?

[Ole Broke Azz]

now that sounds like a plan, I hope it works out for you

I caught the premarket at 24.00 today and sold about 30 minutes later at 25.00

completely spaced out the dip to 24.96 and had my order in at 24.75

later my level II froze up and I was working on something else and didn't notice... what was it... 28.41 or something like that. Talk about missing out

but that is the great thing about scalping and day trading... tomorrow is another day

[JohnCM]

Last 2 weeks in May. That is when I will finish my buying.

Week of Apr 20 start small position
Week of Apr 27 continue total 1/6th
Week of May 4th at least 1/3 position
Week of May 11th major purchase 30%
Week of May 18th major purchase 30%
Week of May 25th finish purchase 6%

NRGU 3X 50%
UCO 2X 25%
ERX 2X 25%

2.5X

Conservatively WTI $15.00 to $25.00 Selling week of June 1st.

40% X 2.5X gives you a double (bagger).

If You're Betting On Higher Oil Prices, USO Is Not The Right Vehicle

Apr. 17, 2020
HFI Research
Seeking Alpha.

Summary

A lot of people are buying USO to bet on a rebound in oil price. That's the wrong vehicle to do it in.

USO will suffer greatly in the near term due to the super contango we are seeing in the market.

Cushing inventory as of April 14 already is sitting at ~60 million barrels. It will be filled in three to four weeks.

Once storage hits tanktop in Cushing, June WTI is likely to blowout vs. July, making USO holders very vulnerable to a sell-off. Combine this with the fact that USO holds 20% of the June WTI contract positions and the sell-off could be intensified on May 5 when the roll begins.

There are far more alternatives to bet on a rise in oil price, but none of them are perfect.

This has garnered a lot of attention over the past week, so we thought it's an important topic for an oil market fundamentals report. If you don't want to read the explanation below, the punchline is that USO is not the vehicle to bet on higher oil prices, at least not in the current market environment.

USO suffers/benefits from something called the roll yield.

First, you need to understand what a futures curve is.

You can see the WTI forward curve at the moment, one year ago and up to five years ago. What you will notice is that the WTI curve one and two years ago was downward sloping. This is what you call ackwardation. In a backwardation market, supply is less than demand, causing the prompt or current prices to be higher than future prices.

In a contango market, which is what the current curve is (shaping upward), supply is greater than demand, causing prompt prices to be lower than future prices.

Now the issue you run into with USO is that betting on oil price rising or falling is an imperfect science. Because of the nature of futures trading, there are contract expirations that the speculators have to contend with. There's no continuous oil instrument you can keep betting on to see whether prices rise or not (more on this later).

As for USO, on the seventh of every month and for the next four business trading days, it will start selling the current prompt month and buy into the next month. You can see the anticipated roll period on the USO sponsor website.

This is where the problem of a super contango market kicks in. USO already is in June contracts, but with May contracts currently trading at $18.20/bbl, there's a risk that as physical oil trading starts in May, June contracts could fall below $20/bbl (like what's happening to May).

The reason is that WTI contracts are settled in Cushing, where inventories are promptly starting to get full.

Cushing working storage capacity is ~76 million barrels. Cushing inventory was ~55 million barrels, according to EIA at the end of April 10, and as of the latest data up to April 14, according to Genscape, Cushing is at 60.66 million barrels.

This means that if nothing changes (no more additional shut-ins take place), in the span of three to four weeks, Cushing inventory will hit tanktop. This mechanism will force widespread oil production shut-ins. At the moment, Permian producers are only curtailing ~30% of production, but that will likely increase to 75% if not 100% by end of May. That's because producers that had access to pipelines were hoping to store the oil in Cushing so that they can be sold for a later date (contango market).

But once Cushing is full, this will prevent that mechanism and force a shut-in. As for prices, this will likely not bode well for June contracts. The timing of this will likely coincide with the time USO starts to sell out of June contracts and buy into July contracts.

Combine this with the fact that USO now owns ~20% of the outstanding June WTI contracts, and we can quickly see how June WTI prices could crater as we get closer and closer to May 5 (the date where USO starts to roll).

Trade Idea - Short USO

So rather than the retail/consensus view of buying USO, we are actually looking at shorting USO. This is not a riskless trade, however, and we will walk through the logic of this trade.

For starters, we know shut-ins are happening, and we would actually want to see Cushing hit tanktop, forcing a widespread shut-in across the Permian and Mid-Con producers. But because of the near-term demand destruction and the reduction in refinery throughput, demand near term won't rebound (not within the next month). And even if states start to reopen, refineries will have to work through the bloated product storage first before buying crude again. So other than the risk of a near-term short squeeze, we don't have to worry too much about a demand spike risk.

Now if we assume that Cushing continues to build and that the current May contracts trading at $18/bbl are more reflective of the actual physical market, then June contracts will likely drop as we get closer to May contract expiration. The price difference today is 6.91/bbl.

If you put that into percentage terms, the risk for those holding USO today is ~27.6%. Not only will USO holders suffer a potential 27% loss from June contracts moving to May contract prices, but then there's also the issue of June rolling into July on May 5. And with July trading at $29.68/bbl, USO holders will suffer an additional $4.60/bbl or ~15.5% roll cost.

If you want us to put it in layman terms - you are getting a really bad deal being long USO, but you might make more by betting against USO.

Alternatives but far from perfect

There are alternatives like energy stocks and MLPs that investors can bet on higher oil prices. Heck, investors who want to bet on oil prices themselves can open a futures trading account and by oil futures far out on the curve.

None of these alternatives are perfect, but they definitely beat out the cost of owning USO today.

We are now entering one of the craziest periods in the energy sector. Valuations have gotten so out of hand that we believe this is the final washout.

[JohnCM]

WTI June is $20.00

[TraderRich]

https://www.zerohedge.com/markets/here-full-explanation-behind-oils-unprecedented-negative-price

[Buckey]

I think when they re-write the wiki definition of
"Da arse fell otta er" they will put the 1 hour chart for WTI in there for the last hour of trading

[Montanore]

Holy cow--soon it will go negative, lol

[Ole Broke Azz]

I see that

[Buckey]

WTI may contracts minus $23 dollars

[Ole Broke Azz]

it costs more to buy a gallon of water at 7/11 than a barrel of oil

https://www.macrotrends.net/2566/crude-oil-prices-today-live-chart

[Richsooka]

Yessir!

[Buckey]

oh I know just a very interesting phenomenon today with a variety of oil commodities in the negative

[Richsooka]

You need to look at the June contract which is right around $21. You're looking at the April contract which expires at the end of the day. It is odd to see the expiring contract be driven all the way to negative...usually it continues to move on low volume with the new contract. Odd things going on indeed though.

[Buckey]

sure is good thing GUSH doesnt triple track WTI. WTI was 25 a few days ago. under a dollar right now

https://www.bloomberg.com/quote/CL1:COM

[Ole Broke Azz]

beautiful move off of the LOD this morning

[JohnCM]

Hey Smilin,

We want to act like bank robbers. We want to be in and out. But in long enough to make out with the loot.

My goal is a double. A bagger. I think 2 to 3 weeks might do it. Last week in May and second week in June. In and out. SCO.

Roughly CRUDE $15.00 to $25.00 = 40% and SCO is leveraged 2X.

If you are lucky $15.00 to $30.00 = 50% and SCO and there is your bagger!

What do you think?

[JohnCM]

3X leveraged Oil and Gas ETF ETN

... are becoming extinct.

ERX Direxion Energy bull 3X
NRGU Microsectors US big oil index ETN 3X

[JohnCM]

[zc182]

We actually just had a reverse split by the company which affected a 40 shares = 1 share ratio.

[Edit Add Website: https://www.splithistory.com/gush/]

They also reduced is from a 3x exposure to a 2x exposure.

GUSH is not meant to be bought and held. It is meant to be traded as soon as intraday as market conditions change.

The following website explains their split history and also tells you what a $10,000 investment would be after the 4.9 year history of the ETF. Long story short.

$10,000 after five years is worth only $90

Advanced traders only.

[zc182]

GUSH doesn't track oil price, it tracks spx oil companies. The rise in price is based on hopes of reduced oil production, though from my reading which I can't source off hand, those cuts won't do much to prop up oil prices in the near term.

Strong SPX oil companies are a fair place to store cash assuming we have a country to go back to once the dust settles.

From the Direxion website,
"The S&P Oil & Gas Exploration & Production Select Industry Index (SPSIOPTR) is provided by Standard & Poor's Index Provider and includes domestic companies from the oil and gas exploration and production sub-industry. The Index is designed to measure the performance of a sub-industry or group of sub-industries determined based on the Global Industry Classification Standards (GICS)"

http://www.direxion.com/products/daily-sp-oil-gas-exp-prod-bull-3x-shares#

[Buckey]

OIL down GUSH up?

[Mic ll]

I like it.

[TRADEC0WBOY]

I can see this running 2,000% Fromm here

[Mic ll]

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[TRADEC0WBOY]

I am taking long position here... I mean $1500 in January $21 today? I’ll take that risk! The upside is massive the down side is small!

[Lowjack]

Maybe I'll fill up the truck and light it for 4th of July!

https://www.texastribune.org/2020/04/15/texas-oil-production-cuts-not-happening-yet-railroad-commission/

[Ole Broke Azz]

This could be very news

[Lowjack]

That's not oil, it's blood!

[Sgreg]

Well the news is out for the most part. I think XOP has hit a temporary top and DRIP is the short term play. However I will hop back into GUSH soon. I am very bullish on the oil sector. There is going to be high inflation I believe with 0 rates, stimulus, FED QE etc. Looks like 2010 repeat so Oil, Gold, Silver I like a lot. Good Luck everyone and I look to be back in sometime soon.

[Meangene818]

Awesome

[Sgreg]

Your conviction did you well. That was actually a wise move IMO. XOP was so insanely cheap.

[Buckey]

it doubles since last Monday LOD. I was down a lot for pre r/s but somehow kept slugging away with new funds which I NEVER reccomend doing and came out on top. It rarely works out that way. I went back in at close much smaller position at 24.10 actually higher than my last sells

[Sgreg]

Yes it was a great day. Been a great week. Figures they castrated GUSH just before XOP goes on a big run. Not to mention they liquidated GASL just before it would have had a big run. UWT as well. Anyway I sold about half today. It might be a sell the news tomorrow with OPEC meeting but I kept half just in case.

[pay streak]

Looking good , wish this was still 3x