GOOG played out nicely with the calls we looked at yesterday jumping about 80% by the end of the day. There is still room for that trade to run but in this climate locking in a juicy win is never a bad idea. So what is next? When we scan for some over sold tickers that have the potential to jump, we see a bunch of energy related stocks. When the sector is showing broad strength, one way to exploit it is to look at the ETF. Here is a chart of one of the more liquid energy ETFs that offers a quick trade opportunity:
A couple factors make XLE attractive. The current trend is up and recent consolidation sets up a nice breakout move. Yesterday’s tug of war shows that the bulls eked out a win. That doji candle is a sign of bottled up momentum. And, the options are cheap. Sept 18 60 calls are about $1.70. A logical move would be for XLE to retest the recent high at about 61. Grabbing the cheap calls puts you in a good spot if it breaks through.
We’ll keep watching and see how this plays out.
Keep learning and trade wisely,
John Boyer
Editor
Market Wealth Daily
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