Fighting escalated over the weekend and added to the malaise created by a squishy Fed position projected from the meeting on Friday. Couple that with a huge deal to secure oil supply from Venezuela and the impact of good NVDA earnings and we have a market blender that someone just pushed the puree button on.
The place we are going to start looking for trades is the oil market and there are a couple likely candidates we are going to be watching at the open this morning that offer a simple way to exploit this environment.
There are two ETFs that are locked in to the oil market and while the generally track the rise and fall of oil over time, there are very key differences that make them unique. USO tracks the spot price of crude itself and can be used to leverage the movement in that price. OIH is another oil ETF and it holds stocks of oil producing companies.
The big thing to keep in mind with these two is that while oil prices can go up, so can the cost companies have to pay to extract, transport and deliver that oil.
While it isn’t a spot on correlation, in general USO is more of a leader with OIH following. We are going to be watching these two as the market opens and we see how traders respond to these events. The expectation is USO will rise and OIH could dip a bit or simply follow the move.
Keep an eye out and we’ll see if there is a solid trade from these moves.
Keep learning and trade wisely,
John Boyer
Editor
Market Wealth Daily
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