Be alerted when Mike posts an article
The most recent downleg in the ProShares UltraShort Oil & Gas ETF (DUG) from 31.93 to 25.73 looks like a completed bearish structure. The fact that prices reversed sharply to the upside today after first hitting a new low suggests strongly that the DUG hit downside exhaustion at under 25.80 earlier today.
For the time being, DUG is in the midst of a run-of-the-mill recovery rally. That said, the energy sector is so overbought and vulnerable to a period of retrenchment that this run-of-the-mill recovery rally (in the inverse DUG) could easily and quickly morph into a powerful countertrend rout, as holders of long energy positions take some of their very substantial profits.
In terms of the DUG, my initial upside target zone is 27.60-28.00.
Mike Paulenoff is author of www.MPTrader.com, a real-time diary of his technical analysis & trade alerts on ETFs for precious metals, energy, currencies, and an array of equity indices and sectors, including international markets, plus key ETF component stocks in sectors like technology, mining, and banking. Sign up for a Free 15-day Trial!
