(UCO) ProShares Ultra Bloomberg - Ratings and Ratios

ProShares Ultra Bloomberg Crude Oil (UCO) is an exchange-traded fund designed to provide leveraged exposure to the daily performance of West Texas Intermediate (WTI) sweet, light crude oil. Instead of directly investing in oil, the fund utilizes a range of financial instruments, including swap agreements, futures contracts, forward contracts, and option contracts, to achieve its investment objective.

The funds strategy involves tracking the Bloomberg WTI Crude Oil Subindex, which is designed to reflect the returns of owning and rolling WTI crude oil futures contracts. By using leverage, UCO aims to deliver twice the daily return of the underlying index, making it a popular choice among traders seeking to capitalize on short-term movements in crude oil prices.

Analyzing the funds recent performance, we observe that the last price is $20.65, with a 20-day simple moving average (SMA) of $20.59, indicating a slight upward trend. However, the 50-day SMA ($22.93) and 200-day SMA ($26.33) suggest a longer-term downtrend. The average true range (ATR) is $1.34, representing a 6.51% volatility, which is relatively high. Considering the 52-week high ($34.90) and low ($18.66), the current price is near the lower end of the range.

With an assets under management (AUM) of $414.60 million, UCO has a moderate size, allowing for sufficient liquidity. Combining the technical and fundamental data, a forecast for UCO can be derived. Given the current technical indicators, such as the SMA20 being close to the last price, and considering the fundamental aspect of crude oil demand and supply, a potential price movement can be anticipated. If the crude oil market experiences a significant shift due to geopolitical events or changes in global demand, UCOs price could be affected. A potential target price could be around $22.50, based on a reversion to the mean towards the SMA50, assuming a moderate recovery in crude oil prices. However, if the downtrend continues, the next support level could be around $18.66, the 52-week low.

Its essential to note that, as a leveraged ETF, UCO is designed for short-term trading and may not be suitable for long-term investors due to the compounding effect of daily returns, which can lead to deviations from the expected performance over longer periods.