ProShares Ultra Consumer Goods (UGE) — This leveraged ETF seeks daily investment results that roughly correspond to twice the daily performance of the Dow Jones U.S. Consumer Goods Index.
Since March 2009, UGE has more than doubled. The advance consistently tracked the 50-day moving average (m.a.) until late January, when profit-taking and a market correction drove it below the m.a.
Then, on Feb. 9, a key reversal shot prices back above the 50-day m.a., where it again found support.
Tuesday, buyers drove the ETF through a triple-top, which was confirmed yesterday.
This volatile performer could have wide swings, so take a half position now and a full position below $53. This could result in a 7-point profit since the target for a trade is $60.
A word of warning: This is “for traders only,” as the SEC has determined that “ultra funds” are not good long-term investments and are most appropriate for short-term trades.
Because it carries greater risk than an ordinary ETF, investors should use stop-loss orders. Finally, the margin requirement for most leveraged ETFs is 100%, but check with your broker before entering an order.
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