Sunday, June 01, 2008

The Energy and Oil tanker Play


Remember when you would watch CNBC or open your newspaper and the only thing would hear was the word SUBPRIME. Well, here's a nice little cartoon story about the Subprime mess.(Just click to view each slide, its funny I think)

I've been looking at several stock screens trying to come up with stocks with good fundamentals and technical setups. I'm surprised to find that many of the stocks with big gains make less than 100mil a year. Also, I found that Oil Tankers have a high profit margin and have some technical momentum.

Here's one of my scans with the 20 top stocks in the Transport sector-
Transport Stock Scan
Here's a chart of FRO- looks like its got some good momentum...


Some of these stocks I don't like because there net profit is weak. I like to see stocks with net profits over 100 mil. You'll notice a lot of the shipping stocks pay a nice dividend too. There is some concern when looking at the Shippers. I was looking at the Baltic Dry index and we are about to make new highs and go on a momentum run or we are at a double top and the Shippers are going to....TANK.



Also, there is some concern that if oil drops back to $100 dollars that the whole Oil play could get hit hard. As noted by TradersFeed, the energy trade may be slowing. Dr.Brett noticed lower peaks in money flow as we make higher highs in the XLE sector.



Perhaps looking at the relationship between Oil, Airlines, and the inverse XLE ETF "DUG" will help us make a better call on this trade.

Airlines have always been crappy stocks plain and simple. I'm sure some people have read that stocks like LUV have an oil hedge for the next 3 years;however, I still find it hard to invest in a company that is losing money and has its future directly tied to whether the price of oil goes down.


DUG- You'll notice volume is getting pretty heavy in DUG, but we have yet to make a bull setup. You can try to bottom fish, but I would prefer a better setup personally.


Oil- For some reason I felt that Oil would drop when BUSH left the whitehouse. Maybe I should just wait until November and then decide whether we have made a top or not in oil.


With Hurricane season coming up, the new energy play has shifted to Natural Gas. As you can see, stocks like NGAS have already run up ahead of hurricane season.



Perhaps the new energy trade idea is to short Crude oil and go long Natural Gas in a hedged trade. I'll have to track this trade idea.

2 comments:

FX on 2:06 PM said...

Hi HPT,
how come that you are focusing so much on fundamentals and overall picture when you make profits scalping or day trading? You can trade very well without any of analysis just by playing small t/f chart and market action. Isn't this just distract you from your trade plan.

I'm asking this because I noticed that I get too prejudiced when I'm thinking about the big picture and than my short term trading suffer. To me it's best just to focus on trading when I trade and ignore all other ideas and thinking.

HPT on 9:09 PM said...

I'm not trying to be an analyst, but I do like to have a view of the broader market and a long term view. I'm planning on doing some "investing", and making trades that last a few weeks or more, that's why I posted the stock screener with the fundamentals. I have other stock screeners that I look at for day trades that I'll try to post later.

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