top of page

The Coachman's Report - An Oil Rush for the Ages

Happy Tuesday Folks! We had a solid start to the week yesterday with two solid, positive-return picks (F45 was up 5.98% during the trading session, up another 3.18% in the after-hours Hologix was up 1.23%) and markets that traded largely sideways. Keep reading for some more market inspiration and an added section on the state of fixed income (and a possible trade to be made in that arena) as we unveil one new section to each day’s Coachman’s Report this week (so far, Monday’s will see an added section on earnings and Tuesdays, one on FI markets).


“Reality has its own power—you can turn your back on it, but it will find you in the end, and your inability to cope with it will be your ruin.” - 50 Cent


Market Talk

Interestingly enough, even though equities tend to follow the same direction of a large move the day after and the S&P 500 gained a whopping 4% on Friday, today’s prices were relatively unchanged and we saw the VIX continue to trend lower, settling at 27.45 by the close. On the commodity front, energy and metals were relatively mixed with AGS being discernibly green, alongside natural gas also gaining 2%.


Today's report is brought to you by...

As you know, we offer these actionable trade ideas to you, the reader, for no cost. That being said, we’ve partnered with brands that can offer you the best in class options for your financial journey. Interactive Brokers conducts its broker/dealer business on over 150 market destinations worldwide. In its broker dealer agency business, IBKR provides direct access to trade execution and clearing services to institutional and professional traders for a wide variety of electronically traded products including stocks, options, futures, currencies, bonds, gold, crypto, and funds worldwide. Click here and sign up today to receive up to $1000 in IBKR stock!


Long: Exxon Mobil ($XOM-NYSE) | Timeline: 2-4 days

Another energy play for your Tuesday morning, this time on the docket: Exxon Mobil. For those who don’t know, Exxon Mobil is one of the largest producers and refiners of oil-related products worldwide. As you may have seen recently, oil prices have surged on the announcement that China aims to end their draconian lockdowns by June 1. This announcement sent crude oil prices to roughly $114. However, that is not the most pressing issue, as we all know crude oil is turned into a variety of essential products including jet fuel, gasoline, and diesel. The US is currently facing a refinery capacity shortage, which has resulted in the least amount of fuel available since the fuel crises of the 1970s. However, as investors, there is always a silver lining. Saudi Aramco’s earnings have climbed tremendously due to the ongoing bidding war for refining, and it’s likely that Exxon can benefit from this as well, as they operate the largest refinery in the United States. Additionally, as their business model is diversified both in locations, and oil refinement stages, they are poised to benefit from all price increases of crude oil. In terms of the technicals, every signal is flashing a bright green buy signal, from all moving averages to the momentum and MACD. In terms of price action history on this stock, the current price levels have been achieved only a few times in the stocks history, namely from mid-2007, and Q1 of 2013 to Q2 of 2014. That being said, the money supply has increased dramatically since these prices were achieved, and as such, in my humble opinion, has a lot of room to climb.


Long: Continental Resources, Inc. (CLR:NYSE) | Timeline: 5-7 days

One more energy play for your investing palette, because why not? Continental Resources, Inc. (CLR) explores for, develops, and produces crude oil and natural gas primarily in the north, south, and east regions of the United States - primarily selling to energy marketing companies, crude oil refining companies, and natural gas gathering and processing companies. The company has been able to beat analysts’ expectations for the fifth quarter in a row as they continue to show signs of strength and consolidation in higher price channels. CLR has been able to bounce back after retesting the 100-day moving average a number of times throughout its earnings seasons due to cautious investors and speculators unsure of what the company will announce. However, the three highlighted regions have shown how sideways price action has the ability to cool off the RSI and MACD, which is a great sign of consolidation into higher price channels.


Fixed Income Markets

Alrighty, the credit environment has been bopping recently and rightfully so given a pushed-up rate hike timeline and corporate credit ratings getting knocked left, right and center! However, today we would like to draw your attention to the 10-year Japanese Government Bond - which currently has a yield of 0.246% and is only being propped up by the commitment of Japan’s central bank to cap the 10-year JGB yield at 0.25%. Just last week it topped the scales at 0.249%, less than a tenth of a measly basis point from this implied max! The resources it is taking to support the purchasing of these securities is enormous and unsustainable - the market has reacted with the Japanese Yen plummeting 15% in USD terms over the last 12 month period as the BOJ has had a record quarter of asset purchasing within Q1 2022, bringing it’s ownership of JGBs to 526 trillion yen ($4.2T USD) in April. A majority of economists predict something must go and that a major change to monetary policy must take place as Japan has been in dire straits for a while - the trade to be had as we near this tipping point is in shorting the 10-year JGB or in taking a position in a derivative/corollary such as another maturity or a forex trade involving the yen.


Chart of the Day: The Cyclicality of Energy vs. Tech Stocks within the S&P 500


Bonus Chart of the Day: National Home Price Index

bottom of page