You Won’t Get Another Entry Point This Good for Years
Today I’m going to give you access to a recommendation I released just hours ago to paid-up members of my specialized trading service.
I’ve never done this before, and frankly, I won’t do it often, because it’s not fair to subscribers who are paying thousands of dollars for my profit recommendations.
But this is too big not to share.
So let’s cut to the chase with today’s opportunity. It’s hooked directly into one of the “Unstoppable Trends” we haven’t talked about yet and it involves a Tactic that’s ideal for market conditions right now. So I want to make sure you know how to use it.
What I Told My Geiger Index Members
Oil got smashed to three-year lows yesterday following a Saudi price cut that traders believe paves the way for even lower prices in the months ahead. Not surprisingly, many great companies related to energy have gotten slammed in a classic “guilt by association” move.
For millions of investors, this is a watershed moment. They pay huge amounts of lip service to wanting a correction, yet now that it’s happening they are completely panicked. Many can’t take their fingers off the sell button.
I say you use that to our advantage and make a move to pick up one of the energy industry’s strongest players – Halliburton Co. (NYSE:HAL), which was off a whopping -5.99% Tuesday alone.
Right now there’s a classic “hook pattern” forming, which you can see quite clearly in this chart from YahooFinance.com highlighting Tuesday’s trading action. All three elements – falling price, a horizontal base, and a large volume bar – are there, confirming that this is an ideal entry point.
If you’re not familiar with the term, a “hook” is a pattern formed when institutional traders squeeze the weak money out of a trade and proceed to take it in the opposite direction after doing so; in this case that’s up.
Hooks are time-insensitive so they can play out in minutes, hours or even days. You’ll know a hook when you see an extended price movement in one direction that is accompanied by a dramatically higher bar at or near the bottom that signals capitulation. That, in turn, is followed by a period of digestion or accumulation before prices reverse.
So here’s what to do…
Action to Take: Enter a lowball order to buy Halliburton Co. (NYSE:HAL) at $44.50 or less. [Note: If that’s a new tactic for you, please read to the sidebar to the right for a play-by-play.]
If you are able to scoop up shares of HAL at $44.50 or less, I’d recommend a protective stop at $33.75, which represents a 32.9% margin of safety (based on the current price), and a price HAL hasn’t traded down to since December 31, 2012.
And, now, the bigger picture on this trade.
Despite a lot of talk to the contrary, oil is not going anywhere soon. There are still trillions of dollars being spent in an effort to keep the planet moving. That’s why Energy is one of our six unstoppable global trends.
Worldwide demand will increase by 31% to 119.4 million barrels a day by 2040, according to the EIA’s International Energy Outlook 2014, with the lion’s share of that coming from Asia, which is largely price insensitive given government subsidies there. So the short-term price war the Saudis are kicking off is really only to their detriment (and our benefit because of the opportunities it’s creating).
Halliburton has met or exceeded analyst estimates for the past nine straight quarters, so we’re hardly going with a fly-by-night operation here. I think the company is exceptionally well positioned to move sharply higher a year from now, even if oil remains cheap.
Speaking of which, Goldman Sachs just issued a report that every drop in price per barrel of $1 below the company’s “$84 baseline” may translate into a rise in 2015 EPS increases of about $1 a share for the average S&P 500 company. By 2016, Goldman sees that EPS increase jumps all the way to $4!
So there are plenty of broader implications to be had, not the least of which is that still further declines will be great for your other investments, too.
And, finally, despite all the teeth-gnashing, lower prices are going to quickly self-correct any supply imbalances the Saudis think they’ve got cornered. When that happens, Halliburton will be off to the races because it is the industry’s largest fracking services supplier – and it’s fracking that will be more responsive to price movements when they happen.
Best regards for great investing,