Oil Is Off to a Strong Start…

April 4, 2019  |  Michael Reilly

Maybe you weren’t paying attention at the pump lately.

Maybe you were thinking about filling up and running in to grab at least one ticket for the nearly half billion dollar Powerball grand prize. (I sure was!)

And perhaps you didn’t notice as oil prices rose over 30% in the first quarter, bouncing back after hitting their lowest level in 18 months on Christmas Eve.

Oil is off to the best start to a year since 2002, amid efforts by major exporters to curb global supply.

So, here’s a question – want to lower your cost at the pumps? Or how about lowering the cost to heat your home – any takers?

Here’s how…

Invest in commodities! – not just any commodity. Specifically energy – oil. Why?

Because energy-related commodity funds were among the top performers across the markets in the 1st quarter of 2019.

And if OPEC has anything to say about it, that’s how it will stay!

So while the S&P 500 Index has gotten off to its best start since 1998, up 12.31% through 03/28/19, two energy/oil commodity funds have more than doubled and tripled the gains offered by SPY.

The iPath Goldman Sachs Crude Oil ETF (OILNF) tripled the returns of SPY, up 42.17% in Q1, while United States Oil Fund (USO) more than doubled the returns of the SPY – gaining 29.40%.

The strong run in Oil helped push the United States Gasoline Fund (UGA) higher too, as it rose 28.24%.

An investment in any of these funds could have helped offset the rising costs paid at the pumps by putting some of those gains back in your pocket!

For you pure index investors out there …  Beware!

The strong run in Energy caused a big difference in performance between the two leading Commodity ETF benchmarks – the iShares S&P GSCI Commodity-Index Trust GSG and the WisdomTree Continuous Commodity Index Fund GCC.

That’s because GSG has roughly 63% exposure to Energy while GCC has only 12% exposure.

So, the larger allocation to Energy aided in GSG’s outperformance over GCC, posting a 13.06% gain versus 3.37%, respectively.

For us, relative strength is all about finding the strongest sectors and sub-sectors in the worlds strongest markets.

And that’s why if you asked our research team to seek out some of the leadership in the commodities space – we wouldn’t have recommended an oil related index!

Because why own the whole index when you can own just the strongest parts!

That’d be like ordering the whole Happy Meal, when you really only want the fries!

So, while GSC has turned in a very respectable 13.06% through the first quarter – in line with the S&P 500 – there are ETFs – like OILNF, USO, and USG that have smoked GSC’s returns.

The ETFs named aren’t the only oil plays showing strong momentum either.

Here are three other ETFs that have rewarded astute investors with market beating returns in Q1.

The Invesco DB Energy fund (DBE) has out-gained the S&P with its 17.60% Q1 gains.

Both the U.S. Brent Oil fund (BNO) and the U.S. 12 month Oil fund (USL) have more than doubled the return of our S&P 500 index proxy (SPY) – gaining 24.59% and 24.12% respectively.

2019 has gotten off to a great start for momentum investing.

For more information about how our proprietary relative strength algorithms can help restructure your portfolio to take advantage of these gains BEFORE they happen, don’t hesitate to schedule a consultation with one of our advisors today.

In just a few minutes, we can run your current accounts through our specialized software to identify areas of strength and weakness in your current portfolio. Investors with at least $500,000 of investable inventory are eligible for a completely FREE evaluation.

Don’t wait, click here to schedule your consultation today.

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