Energy sector bulls are feeling anything but energetic these days. Nonetheless, traders can still extract profitable opportunities in the sector with the flexibility of leveraged/inverse funds from Direxion.
As mentioned by Morningstar, the current economic environment has investors wary about energy. Geopolitical tensions, tariffs, and the potential of an economic slowdown have been applying downward pressure to the energy sector.
Oil prices in particular have been susceptible to the downtrend. As reported by Reuters, price levels hit their lowest in over four years, making oil a continued target for bearish traders. With tariffs still heavily influencing market movements, oil will continue to feel the brunt of the volatility.
“Amid the standoff, worries about the effect on global growth are lingering, and it’s showing up in oil prices, with Brent crude falling back by around 1% as projections for energy demand are scaled back,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
In today’s economy, it’s difficult to escape the ongoing effects of inflation. Market analysts expect the trade wars to feed into inflation, thereby tamping down demand for oil.
“American trade policy uncertainties have rippled through the market, including possible inflationary impacts that could weaken demand, and a Russia-Ukraine peace deal could further weigh on crude prices,” wrote Morningstar director Joshua Aguilar.
Oil’s weakness is certainly taking the sector with it. The S&P GSCI Energy Index is down over 15% for the year, making the sector a target for bears.
2 Energy Plays to Consider
With downside abundant in the energy sector, Direxion has a pair of inverse funds that can provide ample opportunities to profit in a bear market. Having the ability to trade upside or downside will allow traders to be pliable in any market.
For continued bearishness in the overall energy sector, consider the +Direxion Daily Energy Bear 2X Shares+ (ERY ). ERY seeks 200% of the daily performance of the Energy Select Sector Index, which is provided by S&P Dow Jones Indices and includes domestic companies from the energy sector, which includes the following industries: oil, gas, consumable fuels, and energy equipment and services.
If oil prices continue to trend lower, then take a look at the Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares (DRIP ). The fund seeks 200% of the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index.
For more news, information, and analysis, visit the Leveraged & Inverse Channel.
