Energy To Lead Again?

JC Parets
July 24, 2023

Crude Oil futures are pushing up against new 3-month highs just as investors have given up on the commodities trade.

No one I speak to thinks Energy leads the way in the 2nd half of 2023.

And I speak to a lot of people who got the past year very right. Even they don't believe...

Here's what I see: Former resistance for Crude Oil in 2018 turning into support throughout the past year:

After a massive ripper off the lows, the market saw rotation into other sectors, leaving energy behind for a little while.

But what if Energy comes back? What if this was just the digestion after the initial thrust, which would be perfectly normal?

I think this chart here will tell a major story. We're looking at Energy stocks vs Tech stocks.

What if this was not a massive top?

And what if Energy starts to catch a bid while growth stocks take a well-deserved break?

Also one thing to keep in mind is that Energy represents only 4% of the S&P500. It's closer to a 0% weighting in the Nasdaq100.

So we could very easily see a scenario where some energy stocks are doubling and tripling in price, and the sector is leading, but it's making little to no impact on the major indexes.

This is not a driver of the averages, like Technology is...

So when they say, "Stock pickers market", I think the second half of 2023 is very likely to be exactly that.

We went over what we want to do about it on last week's LIVE Call.

Check out the replay and download the slides here.

Then see what else is happening in Commodities and other Futures markets. This is our latest C.O.T. Heatmap:

We put together a report on commodities and the stocks related to those futures contracts every week.

Check out the latest: 5 Reasons to Bet On Energy

Then let me know what you think!

JC

 

 

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