COM - UCO: Taking Profit On Our Winning Tactical Trade
2024-06-24 10:39:41 ET
Summary
- Our tactical trade on the ProShares Ultra Bloomberg Crude Oil ETF has once again surpassed our expectations, delivering an amplified 15.8% gain in less than three weeks.
- WTI crude prices are currently retesting the US$80.60/bbl level. Although we view a retest as a perfectly normal price action, we are taking profit given how rapidly the market has rebounded.
- We are seeing evidence of exhaustion in correlated risk-on assets, including U.S. equities and other commodities. Therefore, the risk of a sharp pullback in prices has become more pronounced.
- By taking profit on this trade, we have the option to recycle capital by pursuing other ideas with better risk-reward or to be in a better position to fully capitalize on a pullback.
- Accordingly, we are downgrading our rating on UCO from "Strong Buy" to "Hold".
The performance of our tactical trade on the ProShares Ultra Bloomberg Crude Oil ETF ( UCO ) has once again surpassed our expectations, delivering a whopping 15.8% gain in less than three weeks since we re-established our bullish view on WTI crude on June 5. Taking advantage of UCO's 2X leveraged exposure to WTI crude, we amplified returns on an otherwise 9.8% gain on NYMEX WTI crude futures....
UCO: Taking Profit On Our Winning Tactical Trade