Taking a look at recent trends can be a good way to get a feel for market direction and identify Electronically Traded Funds (ETFs) that are poised to take advantage of the anticipated market moves. Here are two ETFs that I expect will perform very well in the current environment.
Pick #1: Powershares DB Commodity Index Tracking Fund (DBC)
This fund is composed of futures contracts on 14 of the most heavily-traded and important physical commodities in the world.
This fund is energy-heavy, which will work in its favor in the current environment. The price of West Texas Intermediate (WTI) crude has blasted through overhead resistance. The next overhead resistance for WTI crude is $122. Oil could run higher. DBC also lets you enjoy the generally inflationary trend in commodities of all stripes.
My price target on the DBC is $37 in the next 6 months.
Pick #2: The ProShares Ultra Oil & Gas Fund (DIG)
The DiG tries to track twice (200%) the daily performance of the Dow Jones U.S. Oil & Gas Index. Components of that index include oil drilling equipment and services, coal, oil companies-major, oil companies-secondary, pipelines, liquid, solid or gas fossil fuel producers and service companies.
The companies that make up this fund should make a killing at current oil levels, and should continue to rake in a fortune even if crude oil pulls back to test support at $96 a barrel.
After looking at the trends, I think DIG is going to $86.
In today’s market, we all know anything can happen, but watching the trends and understanding the goals of the investment fund can help identify smart investment moves to make now. Without a doubt, the ETFs I’ve mentioned today are structured and trending to perform in the near-term market environment. We’ll continue to keep you informed as we identify other ETF commodity opportunities.
