Guggenheim Canadian Energy Income ETF (ENY) — I was obviously too early when I last recommended ENY in the Trade of the Day on April 15, when it was trading around $11.30. Now, however, the fundamentals have changed. A drastic cut in oil rigs and an increase in demand should result in higher crude prices, and analysts are forecasting much tighter supplies in 2016.
The top 10 holdings in ENY are Cenovus Energy Inc (CVE), Suncor Energy Inc. (SU), TransCanada Corporation (TRP), Canadian Natural Resources Limited (CNQ), Inter Pipeline Ltd (IPPLF), Enbridge Inc (ENB), Crescent Point Energy Corp (CPG), Pembina Pipeline Corp (PBA), Encana Corporation (ECA) and Cameco Corporation (CCJ).
Some of these companies have been forced to cut their dividends as oil plummeted. For example, Crescent Point Energy, which I featured as the Trade of the Day in mid-July and remains one of my favorite Canadian energy stocks, lowered its dividend in August. Crescent Point still yields more than 7%, though, and ENY throws off a yield of over 4%.
Technically, as my colleague Serge Berger pointed out, the charts of major energy ETFs like United States Oil Fund LP (ETF) (USO) and Market Vectors Oil Services ETF (OIH) have broken their long-term bearish trendlines to the upside. ENY has done the same, and I would add that this fund could benefit from both an increase in oil prices and a stronger Canadian dollar.
Note the powerful break by ENY through its 50-day moving average and long-term bearish resistance line from what appears to be a double-bottom. MACD also issued a strong buy signal.
Buy ENY under $8.60 for a trade to $10, which would result in a quick trading profit of 16%.
