With the broader market falling to pieces, we’ve been hot on energy stocks for about a month now, and boy have they been exploding higher.
If you watched last week’s edition of The Big Picture With Jeff & Roger, it was likely super beneficial for your bank account, so be sure to tune in each Tuesday for my macro discussion with Senior Strategist Roger Scott!
The Big Picture With Jeff & Roger
A simple, two-word phrase describes where I see the broader market heading, which will be even more pronounced with everyone’s favorite growth and high-beta tech stocks: chop shop.
The market will chop people to pieces chasing on the upside and chasing on the downside. One day, you’re going to think everything is great… And the next, you’ll think we’re in a deep bear market.
It all goes back to a common golden thread we’ve been discussing for most of the summer…
It’s all murky — market pricing right now is based on corporate earnings, the economy, where interest rates should be… It’s not clean and simple, and it’s hard to handicap all the data. So we’re getting spasms of joy and relief in the market where people are chasing stocks up, and before they know it, they’re down 10% to 15%.
Here’s the deal: This is a terrible market to be an investor. But it’s a phenomenal market for a trader. And I see that being even more so for the remainder of 2022.
I expect we are going lower. It’s that simple. I hate to be this bearish, but if you’re long, I’d be quick in taking money off the table — unless it’s oil. Then I’d let that bad boy run. Otherwise, I’d take those profits on the flares up.
Are Oil Stocks Still in Play?
So what do Roger and I like in this environment? Easy… the same thing we’ve been talking about for at least a month now: energy.
It looks like natural gas prices could spark a massive crisis in Europe. And the Saudis, who run OPEC+, are talking about cutting production because the commodities futures market doesn’t reflect the reality of the supply/demand problem they have.
They think the price now is artificially low, and I can’t disagree with that. So that’s why oil stocks are shooting up — the expectation of higher oil prices. If they want oil north of $100 a barrel, which I believe they do, it’s going north of $100.
That’s why this is a low-hanging fruit trade. In my opinion, the stocks were a no-brainer, and they’re still a no-brainer.
Here are the three stocks I highlighted as my favorites in last week’s episode of The Big Picture With Jeff & Roger, and their performance over the past week…
- Occidental Petroleum Corp. (NYSE: OXY) — up 17.2%.
- APA Corp. (Nasdaq: APA) — up 18.2%.
- Pioneer Natural Resources Co. (NYSE: PXD) — up 10.8%.
*as of 1 p.m. EDT on Tuesday.
Warren Buffett has been approved to buy up to a 50% stake in OXY, and it’s been making explosive moves — and I see it having even more upside.
Roger and I have been long this stock, and Buffett is betting that oil is going a lot higher, as evidenced by his massive stake in OXY. So I see a situation where Buffett could say he’ll pay $100 a share tender offer for OXY, and it wouldn’t be unreasonable.
So Roger and I think oil and oil stocks could still go a lot higher.
Check out the video up top. We also discussed this week’s gross domestic product data coming Thursday… the Federal Reserve’s tightening that’s coming in September… personal consumption… China… the coming natural gas crisis and all things macro that affect our investments in the market.
Are there any topics you’d like to see me cover or questions you’d like answered? Send me an email at jeff@joyofthetrade.com! And be sure to stay ahead of the markets by subscribing to our YouTube channel and our Instagram page for all of the latest!
P.S. When Wall Street Says This, I’d Do the Opposite
Have you ever noticed after a stock has been down for 30 days… 60 days… shoot, even 90 days…
The big banks then come out and downgrade it?
If you think that “sounds fishy,” then you’re just like me… And you’re right, it is fishy.
So I started digging, and what I found was shocking.
What if Wall Street downgrades a stock… to go LONG on it?
And what if Wall Street upgrades a stock… to SHORT it?
What I uncovered is not just eye-opening, but it could be extremely valuable for a small group of traders who know this ONE secret…
