Energy plays are lighting up

October 11, 20168 Comments

We are long oil through an oil stock and an energy ETF. These positions have been in our portfolio since purchasing them during the Brexit selloff. WTI crude is on the cusp of putting in a head and shoulders bottom, having broken its downtrend a while ago. Targets are $62 then the low $80’s should the $52 neckline break. So far, volume is encouraging for the neckline break to materialize. I am targeting the first level of resistance at $62 or thereabouts as my likely exit point.

oil

Natural gas recently completed a bottom head & shoulders formation, and crossed its next significant level of resistance having broken out at $3. Its done this before, as noted in the 2012 head and shoulders formation. Adding to its potential, the commodity has just entered into its seasonal period of strength. We took a long position in a natural gas equity last week. Traders can consider equities tied to its price, or a direct play in the commodity through an ETF such as UNG or HUN. Nat gas looks to have a target in the $3.80 – $4.80 zone – suggesting the potential for a very nice upside.

nat-gas-short

 

 

BNN last week

For those who missed my BNN show last week – here is the clip.

Capital Idea’s Newsletter

Regular BNN watchers will recall Mark Bunting’s long history as host of the MarketCall program. Mark has been involved in a new newsletter aimed at providing investors with stock and investment idea’s – with contributions from Portfolio Managers like myself and others. Here is a recent newsletter published by Capital Idea’s, featuring an interview he conducted with me surrounding the smart/dumb money index.

 

 

 

 

8 Comments

  • BEING STRONG AS IT IS NOW, DO YOU SEE THE $USD EATING AT YOUR RETURNS ON ANY OIL INVESTMENT FOR A FORSEEABLE FUTURE?

    Reply
    • JP
      owning some oil is good if the USD rises–all commodities trade USD.

      Reply
  • Hi Keith,

    Would you mind sharing a few tickers of companies you looked ? From my beginner’s research, I found that the top options are: ALA, TOU, PEY.

    That’s be my son’s first energy holding in his RESP.

    Thank you for helping the “small guys”.

    Reply
    • Matt–I cant do individual stock requests on the blog – given that everyone would start asking for that – and I have enough on my plate–however, you can always send them to BNN via email when I’m on the show

      Reply
    • @Matt I agree with Richard on watching BNN to get some initial ideas on which stocks to purchase. It is important to know why you are choosing that company. You can go to their website and check out past top picks. 2 people that I really enjoy watching is Keith Richards and then Eric Nuttall.

      Reply
      • Sean–thanks for your input re: Matt’s question-to add to that-you can go to http://www.stockchase.com and read all of the BNN experts comments on a stock you might be following. Its a good resource.

        Reply
        • Thank you for the stock chase link. I have re-read a Keith article in MoneySense and saw his mention of a gas stock. So I’ll use the charts, but give that stock bonus points!

          A comment aside from this:

          Even for the most pragmatic of person, it’s hard to buy a stock based on the chart only, when few are excited about it. You read about a overhang, an issue with the company and think… this must be the worst of picks. Yet, time goes on and the price action remains strong. I suppose what I’m describing is a “denial” period of the market, where after consolidation, the price starts moving up. This has definitly happenned with XEG. Many advisors shook their heads at the recent rally, in disbelief, still recommending us to stay underweight.

          Tough game to play.

          Reply
          • Investing is a mind game. We use both disciplines (Technical and Fundamental) to pick our stocks, but its never a sure thing!

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