I am flexing my Old Testament muscles into the close. Exodus is completely changing the way I select stocks. Usually my ideas evolve out of bigger themes I believe in. One such theme has been energy. I like energy. Everyone’s hooked on it. Take it away for a week and you’ll see what I mean.
Energy is tricky though. Entire countries are dependent upon the sale of natural energy resources. Thus the political theater, special interest, and other powers well beyond the means of your boy Raul are at play. Thus if I am to even step into this arena I need institutional grade weaponry.
I took a position in SAVE today. It’s serves as part of a bigger energy trade I am working. The position consists of XLE, OIS, AAL, and SAVE [listed largest to smallest].
Per the Weekly Strategy Session, I wanted to see energy plays strong early in the week. The thing is, I don’t entirely trust oil bulls. Here’s why:
Weakness in oil has potential to stimulate the share prices of airlines. Also, if you read into the CPI data out yesterday, the airline prices are going up despite the deals in oil. Go figure.
Now I turn to Exodus. My timing has been mushy lately. I’ve also been buying stupid companies with unacceptable fundamentals. Now I can quickly scan fundamentals before execution. Have a look at a few screens on $SAVE, where business is booming and their valuation is still reasonable:
Then there is the real meat of Exodus and what makes its more powerful than anyone else’s screeners and tools, the predictive element. It is flagging oversold on the 12-month algo with nice stats behind it:
Finally, from a technical perspective, which is now my least important parameter but mainly a risk profile tool, we are on day three down so it’s likely to become a bit rocky for the bears. Also, we’re at the low end of a range that the shares have traded through. Thus, despite looking like a knife catch today, it’s a reasonable zone to take some risk.
When dealing with cavemen, you’ve got to get biblical. Godspeed mates.