A massive 84% hit rate, with winners averaging +24% and losers averaging -15%.
What?!?
Those are results for my buy signal in oil, which should flash imminently.
That is a staggeringly high hit rate, with a fantastic risk / reward ratio.
It’s also a safe speculation given oil is not some momentum trash that can and someday will go to zero. Rather it’s among the world’s most necessary and vital commodities, and that necessity puts a safety net beneath the speculation.
Given the importance and demand for oil, you’d think its pricing would be less volatile. However speculative opportunities abound. Repeatedly.
Specifically, here are the past 25 results of my signal:
+33%, -14%, +65%, -11%, +15%
+70%, +30%, +18%, -9%, +22%
-27%, +9%, +35%, +12%, +8%
+50%, +11%, +26%, +8%, +15%
+9%, +10%, +22%, +25%, +18%
Oil is also close to a 4-month bullish “cup & handle” chart trigger:
Caveats:
The signal hasn’t triggered yet, but almost certainly will this week
Events in the Middle East can whipsaw the price of oil, especially during times of conflict… which is virtually always
A stock in an oil company will usually track the price of oil, but it is not oil and can carry greater risk or reward vs. movements in the price of oil
Markets are extremely precarious now, and the coming plunge in equities could adversely affect all sectors
Be aware that while the percentage of oil within the world’s energy mix is declining slightly, overall energy demand is skyrocketing so aggregate demand for oil is steadily increasing.
At the same time global geopolitics, super-lucrative scams in “green” energy, and propaganda have the effect of constraining supply chains and development of new resources.
The back story…
On January 18 of last year I introduced the idea Eight - Juicy Dividends:
Devon Energy (NYSE: DVN) is my “two-for-one and done” for dividends and energy.
https://www.devonenergy.com/about-us
Will go in bigger when [my signal triggers].
June 04 2023, Uranium And Dividends:
I’ll add a full “official” position for this dividends (and oil) “one and done” when DVN - Devon Energy crosses above $50.20
No stop.
Oil looks long-term bullish, but now’s not a good time to buy or add in the sector or to “bottom fish” dividend payers.
Am happy holding Devon Energy (DVN), possibly adding eventually.
Today Devon closed at $41.90, paying a dividend yield of 6.9%
I’ll add a 2nd position when DVN trades back above $42.80
To reduce the risk in holding stock in only a single company for exposure to a commodity or sector, I’m adding two more positions to idea #8 - Oil And Dividends.
That’ll make it a basket of 4; two DVN positions (once the buy above triggers) and…
I’ll buy NRGU when it prints above $430.00
NRGU is the MicroSectors U.S. Big Oil Index 3x Levered ETN
Read about it by clicking here.
It closed today at $424.23
NRGU does not pay a dividend.
I’ll buy Warren Buffett’s favorite oil stock, OXY.
OXY - Occidental Petroleum is the 6th-largest holding of the iconic Berkshire Hathaway, which holds almost 1/3 of OXY shares outstanding and keeps adding more.
The company has a lot going for it, from its oil business to a massive carbon capture technology initiative, to a very material share buyback program.
I’ll buy it above $58.50
OXY closed today at $57.61
It pays a modest dividend of 1.5%
To keep up with all things Berkshire, read the excellent Berkshire Beat substack.
No stop on these positions.
My strategy is to accumulate for the long term, collecting dividends while trading swings based on my signal.
Headlines:
Elon Musk casually floats the idea of buying Disney
Godspeed!
Why Germany's energy transition leader doubles down on natural gas
"This Is A Date With Disaster": Net-Zero Is Pulling The Plug on America’s Electrical 'Life Support System,' New Documentary Says
The NBA is getting sued for the league’s promotional arrangement with Voyager. The crypto trading platform collapsed back in 2022 and owes $4.2B to its customers.
Mastercard launched a new NFT-powered soccer trivia game
The EV Slowdown Isn't Over Yet, RBC Says
CRE Crash Unfolding: "Yes That's Not A Typo - It Literally Sold For $9 Per SQFT"
Not A Single Child Tested Proficient In Math In 67 Illinois Schools
Today’s headline: Berkshire Cuts Stake In Apple, Adds To Energy Giants Chevron And OXY
Boom! You mean we can’t ban fossil fuels immediately? This is a disaster! Well I ain’t giving up my phone if that’s what you think… How else would I be able to yell out into to the fucktard chamber, “ban fossil fuels!?
Joking aside... well, never mind. If you catch me on lunch break with a cricket wing or leg sticking out the corner of my mouth, 1) put gun to head, and 2) please apply sufficient pressure to the trigger to 3) discharge the round.
Sorry for the rant, off track. Great stuff Bruno! Thanks for it.