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Epic Earnings Tests Loom For These Leveraged ETFs

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Epic Earnings Tests Loom For These Leveraged ETFs

The hot exploration and production segment of the energy sector gets its first batch of earnings tests this week as just over 24 percent of the S&P Oil & Gas Exploration & Production Select Industry Index (SPSIOPTR) delivers first-quarter results.

What Happened

Earnings season is prime time for active traders to consider using leveraged exchange-traded funds (ETFs). When it comes to exploration and production earnings reports, the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 3X Shares (NYSE: GUSH) and the Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares (NYSE: DRIP) are the funds to consider.

GUSH looks to deliver triple the daily returns of the S&P Oil & Gas Exploration & Production Select Industry Index while the bearish DRIP attempts to deliver triple the daily inverse returns of that index.

Why It's Important

The S&P Oil & Gas Exploration & Production Select Industry Index is up about 24 percent this year, but that lags the returns of ETFs focusing on oil futures. That energy index still resides below its 200-day moving average and is 27.52 percent below its 52-week high.

Still, there has recently been some bullish sentiment behind exploration and production stocks. As of Monday, April 22nd, the bullish GUSH was sporting a month-to-date gain of almost 11 percent, making it the best-performing leveraged bull fund in the Direxion lineup entering Tuesday's session.

However, data indicating traders are taking profits in GUSH and putting some of that capital to work in the bearish DRIP. For the 10 days ended April 22, GUSH saw outflows of over $26.8 million while the bearish DRIP saw inflows of more than $26.3 million, according to issuer data.

What's Next

More earnings. That is what is next for DRIP and GUSH. If this week's earnings calendar for the S&P Oil & Gas Exploration & Production Select Industry Index appears heavy, consider that next week about 51 percent of the components in that index deliver first-quarter results, providing traders with more opportunities to deploy DRIP and GUSH.

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Posted-In: Earnings Long Ideas News Sector ETFs Short Ideas Commodities Trading Ideas ETFs

 

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