Monday, August 1, 2016, will go down in history as extremely boring. Yes, oil went down. Yes, oil related equities got hammered as usual. Yes, everyone believes oil will hit $35.00 per barrel again before stabilizing. We have heard it all over and over again. It’s days like this that you must have confidence in yourself, your beliefs and really the world around you. I, having lost all hope in humanity, do find days like today difficult. Do you stay in the market? Do you liquidate into cash and walk away for a month? Do you buy everything in sight? Who knows! What I do know is that I am confident in my ability to detect the future. It has paid well numerous times and the market wants to go higher.
WHAT IS THE FUTURE?
The future is higher oil prices if the demand is truly going to increase gradually throughout 2016 and 2017. If we’re all being fed a bunch of bs regarding demand we are all very much in trouble. If inventories are correct, production levels continue to decrease, demand increases, blah, blah, blah…then it is inevitable oil prices will move higher and stabilize. I’m not even worried about the glut in gasoline. The demand was there and normal, we are just extremely oversupplied. The average American traveler did not disappear, we just made too much trying to make up losses from oil. Makes sense to me. Pump that gasoline as hard as you can and let’s try to make some money elsewhere for a change. That backfired too didn’t it??
MY PERSONAL BELIEF
I believe in the next twenty-forty years oil will decline in price and overall demand. It seems logical to me that alternative fuels and cleaner options will come along and decrease the worlds dependency on oil. Hell, it might even happen before my time on Earth expires, but I’m not holding my breathe. I just don’t see oil being all that it is today forever. For now, I plan to ride the wave.
BACK TO THE FUTURE
(Doc Brown would be proud)
With the surplus of crude filling everything from huge storage containers, super-tankers and milk jugs all over the world, the demand for transporting and storing crude oil and other petroleum products will do nothing but increase in the short-term (six to twelve months). Oil tanker companies such as Nordic American Tanker [stock_quote symbol=nat] will benefit from such activities and I believe we are about to hear just that on the 8th of August when NAT releases their latest earnings report.
Oil service companies such as Denbury Resources [stock_quote symbol=dnr] will benefit from higher oil prices, but you must be able to see the big and far out picture. It’s not going to happen tomorrow. It’s not going to happen by Christmas. It may not even happen before 2018, but it will happen. The goal is to research and choose those companies with the best balance sheets, lowest debt and highest probability of success long-term. Pick the companies most likely to make it to the other side…
YES, TODAY WAS TERRIBLE
Monday’s suck, but today was like watching paint dry. You can tell the bulls are getting anxious, and no one is really doing anything major. We all remember August 2015 and I can feel that the market is being very cautious…what I wouldn’t give for some damn volatility!
THINGS I’M WATCHING THIS WEEK
Facebook [stock_quote symbol=fb] – I hold two (2) DEC 110 CALL option contracts with an average trade price of $18.625. I did buy these a little early, and I’m waiting for a larger pullback to around $120-$121 per share to buy more. If it continues higher in the coming weeks I plan to eject at my normal 20% gain.
US Dollar Index Futures (SEP 16) – I watch the dollar carefully and it did move higher today by 0.29%. A higher dollar means lower crude prices.
Amazon [stock_quote symbol=amzn] – I closed all positions after earnings and I’m awaiting another entry point (pullback) and will be buying ATM call options for DEC 2016.
McDonalds [stock_quote symbol=mcd] – Luckily I exited all positions before they reported earnings snapping up a nice profit. I’ve been watching it hover around $118.00 now for two days and I’m waiting on another entry point. I was hoping it would get to the $110 ish range. I plan to buy ITM call options for DEC 2016.
Kroger [stock_quote symbol=kr] – I’ve been watching Kroger very close and it has been hovering around $34.00 per share now for a couple of days. If it holds $34.00 I may be a buyer of DITM call options four (4) to six (6) months out.
Twitter [stock_quote symbol=twtr] – Yes, Twitter. I believe Twitter is going to get purchased and if they don’t they will get their shit together and go higher. I am a recent new user for Twitter having finally succumbed and I feel it is the best place for real-time news. This has got to be worth more than $16.00 per share! I plan to buy ITM call options four (4) to six (6) months out if it dips below $15.00 again.
Energy Select Sector SPDR (ETF) [stock_quote symbol=xle] – If and when oil hits $35.00 per barrel I would be a buyer of the XLE ATM call options four (4) to six (6) months out.