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Diet Ahead

The market drop on Monday/Tuesday gave everyone an opportunity to make some nice entries on additional contracts of existing positions at the levels I suggested last week. Of particular interest were the dips by BTU and VLO. They represented entry points near multi month lows. Halliburton failed to reach my $65-$67 target with a dip to $68 before rocketing off to close on Friday at $74.43.

I am still not adding any new watch list entries due to the instability in the market. If you read my Option Investor commentary this weekend you know my outlook is flat to down. While I think an eventual hurricane and more obstinance out of Iran will pump up oil prices the energy stocks may be in for a tough uphill battle. I would rather only buy the dips on those stocks we already own. My favorites this week are still BTU, MDR, BHI and VLO.

We are going on a summer position diet with a target of 7-8 positions total before late July in anticipation of a late August price dip in oil. If we get some hurricane activity it should push prices higher for one last rally before the demand drop in August. That will be buying time again for energy.

Jim Brown
 

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