Following the extreme bearish positioning in Oil & Gas names an unfortunate catalyst has potentially kick started the squeeze. A lot of funds/big money are positioned on the wrong side of this trade, which sets the stage for a prolonged move.
Names such as XOM are attempting to break out of a big 2 year base and XLE (energy sector) breaking its downtrend.
My preference for OXY is based on the fundamentals of the business, they’re are in a position to provide ungodly high sums of FCF to investors, most just can’t see it yet. I genuinely believe this has room to a 3 digit handle.
Aside from that, the market is looking a little weak and the chop continues. The major lack of setups continues. IWM and XBI remain stuck in the 3-5 year zones and few breakouts are showing any signs of continuation.
$ARKG weekly still looks good, NTLA will present its data on 28th and 1st November which could be a sector moving catalyst. I’d like to see more weakness to purchase more long dated calls. This remains one of the most extremely shorted and under-position sectors.
Traders continue to remain extremely long SPY, the Mag-7 over positioning is pretty wild at this point which leads me to a question. What happens when that eventually unwinds? Does it bring all sectors down with it?
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