UYG traded for six months within the confines of a rectangle bounded by support at $50 and resistance at $64.

On March 11, at $63, I said, “Following a period of very high accumulation, this ETF appears to be breaking from a triangle with supporting evidence of the break coming from the crossing of the 50-day moving average by the 20-day moving average. If successful, the target for a trade in UYG is $72.50 to $75.”

Then, on March 31, at $69, I said, “For those who bought UYG and made a profit, it is time to cover.”

Since then, UYG drove to $75, but has fallen to $50 last week, where it flashed a second buy signal from our internal indicator, the Collins-Bollinger Reversal. If successful this ETF could run first to $60, and then to $65.

This “ultra fund” carries greater risk than an ordinary ETF, so investors should use stop-loss orders. Also, this play is “for traders only,” as the SEC has determined that ultra funds are not good long-term investments and that they are most appropriate for short-term trades.

The margin requirement for most leveraged ETFs is 100%, but check with your broker before entering an order.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.