Buy Alert: January 17, 2017

| January 17, 2017

Buy Alert:  January 17, 2017

 

Trade Details

Buy Transocean (RIG) August 18, 2017 $17 Calls for $1.75 or better (lower)

Buy BP (BP) July 21, 2017 $38 Calls for $1.70 or better (lower)

Buy Halliburton (HAL) July 21, 2017 $60 Calls for $2.50 or better (lower)

Buy Schlumberger Limited (SLB) August 18, 2017 $95 Calls for $2.00 or better (lower)

Buy Delta Air Lines (DAL) June 16, 2017 $42 PUTS for $1.20 or better (lower)

 

Why?

Here we go…

I’ve been watching the Oil markets very closely, and I think we’re poised for a move higher in prices.

Check out this Oil Chart.

Oil011717

As you can see, over the last 12 months, the price of Oil has been quietly climbing… and if you look closely at the 200-day moving average… the blue line on the chart… you’ll see the bottoming of prices.  I’m reading this as a MAJOR sign that oil prices have completed their fall, and will stabilize and climb.

To put it into perspective, this is the first time since late 2014 that the 200-day moving average isn’t moving LOWER!

What else will drive oil prices higher?

Let’s look at OPEC.  In late May, OPEC will be meeting… and the big focus will be compliance around their recent supply cut… It’s estimated they took out 3% to 7% of their production.

Want an even more bullish datapoint?

Let’s look at oil company rig count.  Placing an oil rig out to drill is very, very expensive.  As a result, companies only do it when they honestly think they can make money from the well… and Oil prices will be stable enough to support those profits.  For the 10th week in a row, US oil companies have added to their rig counts.  The early movers are placing their bets… and it all looks like higher oil prices from here!

So who are the winners and losers around the climbing price of oil?

RIG – I picked them because of their PURE exposure to oil prices.

BP – They are an integrated producer and higher prices always help.

HAL – They are a major supplier of products and services to the oil industry – higher prices mean more business.

SLB – Another major supplier of services to big Oil!

There will be losers…

Consider DAL – the airline will see fuel costs rise, and as a result, I expect to see pressure on the stock.

Now, I haven’t given you exit points on purpose… these 5 stocks should move with oil prices, and there are a number of catalysts to drive prices higher.  So, keep your eyes on oil prices… as we see more movement there, we’ll determine what to do with our options!

 

Recent Activity

Transocean

BP

Halliburton

Schlumberger Limited

Delta Air Lines

 

Category: OTW Buy Alerts