The Oil Dilemma

JC Parets
August 13, 2021

Do you have any exposure to Energy?

Then this is the chart for you!

It's Crude Oil stuck between 76 and 66:

76 was the high back in 2018 and 66 was the high in 2019 and earlier this year.

We're right in between.

And it's likely to stay that way for some time.

I'm not going to make a directional bet here any time soon.

You can see the struggle in energy stocks too.

Here's the Oil & Gas Exploration & Production Index Fund $XOP stuck below all those former lows from 2008 and 2016:

This is former support turning into resistance in real time.

We call it "Polarity", and it's just classic supply and demand behavior.

Until Crude Oil is above those 2018 highs of $76 and this Energy Index can get above all those former lows, then why would we bet on higher prices for energy and energy stocks?

I think there have to be easier trades.

Depending on your time horizon, this is a no-touch. We only want to be long once we're above key levels. I'd rather pay more knowing we're on the way up vs buying and sitting around waiting.

No thanks.

I had a nice chat with Sean today about this very situation. Sean is our Chief Options Strategist so he's great at building trades around all kinds of circumstances.

So in this case, where Oil is stuck, we want to sell volatility and collect some cash.

That'll be up tomorrow if I know Sean!

So look out for that one.

And if you're not getting our Options trades, make sure to talk to Peter to get you on the list.

Check out my conversation with Sean yesterday about a new trade on American Eagle $AEO

JC

 

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