How to Play Oil’s Ascent to $150 per Barrel
Don’t trust the bounce.
Yes, the S&P 500, Dow Jones Industrials, and Nasdaq Composite are all on the rise, seeing nice gains over the last week. The battered Nasdaq is leading the charge with a 5.55% jump since May 24, and some are seeing it as a sign to relax – but not me.
The indexes may be inching higher, but, in my opinion, they still have further to fall. The Nasdaq Composite, Russell 2000, Nasdaq 100, and S&P 500 are all in bear market territory. Any rise we see today could be gone tomorrow, which is why we need to focus our attention and capital on what’s actually working: oil and gas.
Before summer ends, we could see the WTI reach $150 per barrel, something I predicted last November. Today’s stock will climb right alongside rising oil prices.
06/01/2022 Take It to the Bank Wednesday Transcript
Hey everybody! Shah Gilani coming to you with your Take It to the Bank Tuesday, where I recommend what you should do with $100 today – as in, right now.
Ooh, markets are up and down, mostly down, and bouncing now and then, like last week’s big 6% bounce across the major benchmarks. Holy Mac… The markets are all over the place.
So, what’s working? How do you play this? How do you invest in a market that bouncing all over the place and, in my opinion, trending back down? The Nasdaq Composite is in a bear market. The Russell 2002: bear market. Nasdaq 100: bear market. The S&P 500 hit intra-day bear market territory, too, down 20% off its all-time highs on May 20.
And I think it could go lower. It’s a crazy market with the heavy duty bounce last week, that dead cat bounce, and it’s confusing. What do you do? Where to you put $100? In a market that is moving up. Something that’s working and what’s working? Oil is working.
Oil is working its way higher. Energy prices are higher. Gas prices are higher. Energy stocks are higher. The whole sector is heating up, so I recommend buying USO, that’s the United States Oil Fund ETF. It’s a proxy for the cash market for oil for the West Texas Intermediate.
On a technical basis, USO is in beautiful shape, a nice rising wedge pattern where the lows are higher. USO broke resistance last week and broke out higher, which means there’s a good chance it will climb even higher.
I have a WTI call for $150 a barrel by the end of the summer and we’re gonna get there, people. I thin USO’s gonna hit it out of the park right along with it. If you want to put a stop in there, I’d put a 20% stop on USO, just below all its recent (higher) lows. In other words, if the trade isn’t working out for some crazy reason, you’ll be out 20% lower or a $20 loss. But it’s well worth it. I don’t think we’re gonna get anywhere near that 20% stop.
Get USO at market value with your $100 and take it to the bank. I think we can get 50% gains out of this, a huge gain for oil.
I’ll see you at the bank.