Today I will continue the assignment from Paul who asked for a comparative analysis of three energy ETF’s. Last time I conducted an analysis of iShares S&P TSX Capped Energy ETF (XEG TSX). A snapshot of the BMO S&P TSX Equal Weight Oil & Gas Index ETF ( ZEO TSX) follows.
The top holdings of ZEO include Encana Corp. (ECA TSX) 9.02%, TransCanada Corp. (TRP TSX) 8.65%, Inter Pipeline Ltd. (IPL TSX)8.55%, Suncor Energy Inc. (SU TSX) 8.52%, and Pembina Pipeline Corp. (PBA TSX) 8.47%. You can look up the other five holdings on the ZEO website.
What is evident when you look at the holdings is that opposed to XEG none of the positions dominate the portfolio. An audit of the charts will provide further insight to your evaluation.
The three-year chart again depicts a long downtrend line that started in 2014 and was finally breached in 2016. The retreat took the units down to a 52-week low of $7.80 by January of 2016.
The 2016 advance coincided with a rise in oil prices which have helped the industry get off the canvass. The move higher has taken ZEO up and through resistance along the downtrend line and the moving averages.
Make note of the resistance near $11.50.
The six-month chart highlights the buy and sell signals generated by the MACD and the RSI since mid January. At this time the momentum indicators are pulling back as ZEO deals with resistance at $11.50. Make note of the golden cross that surfaced in mid April indicating that this leg up has more in it.
What we might expect is a retest of support at $10.75 but not a trend reversal. As with all investments this one demands daily monitoring to avoid surrendering hard earned profits.
Next time I will inspect the case for BMO Junior Oil Index ETF (ZJO TSX).
Make it a profitable day and happy capitalism!