That’s what I’m thinking. A lot of bombing and ugly stuff going on in the Middle East will keep investors conservative. That means a lot of going back to cash, shortening holding periods, taking profits on any positive day, and slimming portfolios just before the weekend.
The Set Up
Today’s trades will be focused on small cap energy companies, especially the ones that spike up on news of hurricane Chris, and deadly heat waves. There’s a double bull trap setup- 1) hurricane Chris is dying down and will not be our first hurricane, and 2) the sticky hot weather is expected to cease this Friday. What does this mean? The energy-hype will temporarily wane. Also be on the look out for earnings, since there will be a lot of oil companies reporting in the next few days.
The Trade
Short any energy stock that spiked out of trading range on the hurricane or heat wave news. If oil continues to fall, for example, below $75, short aggressively.
The Stocks
I don’t really track much, but here’s what I got:
- Blue Dolphin (BDCO) – this one is tricky. There has been a lot of accumulation in anticipation of earnings next week. Compare stock to Houston Exploration (THX) which reports in the morning.
- Streicher Mobile Fuel (FUEL) – heading back under $3 if oil drops
- Weatherfield International (WFT) – showed weakness Wednesday after stock jumped on an upgrade.
- Beacon Powercorp (BCON) – high risk, high return.
- Georesources (GEOI) – heading back under $8.
