ERX ETF

While AI is receiving a lot of attention, other industries are also worth looking into. Despite the focus on transitioning to cleaner energy sources, fossil fuels such as oil and gas are still in demand, leading to increasing prices.

Crude oil prices have posted double-digit percentage gains in 2024 after falling in 2023. The Energy Select Sector SPDR® Fund ETF, XLE, has experienced a double-digit percentage gain in 2024, indicating a positive outlook for the sector. The Direxion Daily Energy Bull 2X Shares ETF, ERX, offers the opportunity to amplify the upside price action in XLE through leverage, but comes with potential downside-time decay.

Energy was the worst-performing sector in the commodities market in 2023, with a decline of 21.85%. The current economic and geopolitical landscape suggests a bullish outlook for fossil fuel prices in 2024. The 2024 driving season and geopolitical tensions could lead to upside price spikes in the oil futures market.

OPEC's recent meeting ended in a stalemate, with unchanged production quotas and a "voluntary" program for additional output cuts. Oil prices have declined due to Chinese economic weakness, but the U.S. is looking to buy at $67-$72 per barrel to replenish its Strategic Petroleum Reserve. The Energy Select Sector SPDR® Fund ETF and Direxion Daily Energy Bull 2X Shares ETF funds offer opportunities for investors to capitalize on potential increases in oil-related share prices, but timing and risk management are crucial.

While the spotlight has been on technology for much of 2023's market rally, energy shouldn't be ignored. Stubborn inflation is keeping these prices high, making way for trading opportunities in the sector.