Oil Stocks Rise As Israel-Hamas Conflict Intensifies, Analysts See Supply Constraints: This ETF Offers 2X

Direxion Daily S&P Oil & Gas Exp & Prod Bull 2X Shares (NYSE:GUSH) was rising about 1.6% higher on Tuesday amid increased geopolitical conflict, which caused Morgan Stanley analyst Daan Struyven to weigh in on how the Israel-Hamas escalation could tighten oil supply.

On Oct. 4, UBS analyst Josh Silverstein raised the price target on Marathon Oil Corporation Corp (NYSE:MRO) from $35 to $37 and maintained a Buy rating on the stock. Exxon Mobil Corp (NYSE:XOM) and Chevron Corporation (NYSE:CVX) both had their price targets bumped higher earlier this month, further indicating analysts are bullish for the oil and gas sector.

GUSH is a double-leveraged fund designed to outperform companies held in the S&P Oil & Gas Exploration & Production Select Industry Index by 200%.

A few of the most popular companies held in the ETF are Exxon, which is weighted at 1.34% within the ETF; Occidental Petroleum Corporation (NYSE:OXY), weighted at 1.37%; and Marathon Oil, weighted at 2.36%.

It should be noted that leveraged ETFs are meant to be used as a trading vehicle as opposed to long-term investments.

For traders looking to play the oil and gas sector bearishly, Direxion offers the Direxion Daily S&P Oil & Gas Exp & Prod Bear 2X Shares ARCA: DRIP).

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The GUSH Chart: After briefly losing support at the 200-day simple moving average (SMA) on Oct. 4, bulls came in and drove GUSH back up above that level, which suggests the ETF is trading in a bull cycle. Although GUSH regained the 200-day SMA and has risen over 12% from the area, the ETF hasn’t yet retraced to form a higher low.

If GUSH eventually retraces above the 200-day SMA and prints a bullish reversal candlestick, such as a doji or hammer candlestick, the ETF’s current downtrend will be negated. For a new uptrend to confirm, the ETF will also need to print a higher high.
GUSH may not retrace all the way to the 200-day SMA, however, because the ETF has a gap below between $35.35 and $36.24. If GUSH falls to close that gap, the lower range of the gap is likely to act as support and a bounce may come from that area.
GUSH has resistance above at $41.39 and at $44.73 and support below at $37.11 and at $35.15.

GUSHDirexion Daily S&P Oil & Gas Exp. & Prod. Bull 2X ETF

OXYOccidental Petroleum Corp

$57.501.00%

XOMExxon Mobil Corp

$152.101.45%

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Oil Stocks Rise As Israel-Hamas Conflict Intensifies, Analysts See Supply Constraints: This ETF Offers 2X Leverage