With OPEC slashing production prices at the pump are going to take off. One way to look at that news is to dive into oil with something like OIH, and ETF that tracks oil related companies. It just broke above its 200 day moving average and the MACD shows it has room to run. If it gets above its recent high at 255 it could reach for the 300 level.
There is a risk that the recent rebound is the biggest part of this move and OIH could settle into a new range. This is where looking at some call options might be a great consideration.
Another way to look at the rising gas prices is to look at clean energy. As traditional fuels prices skyrocket, even the skeptical are beginning to take a look at EVs. One that we look at often is TAN, a clean energy ETF. It is looking for support at its 200 day moving average after being excessively beaten down by the broader market. This might make it a good candidate to breakout and provide a nice rally.
Since it hasn’t broken out of the recent downtrend just yet, we would really like to see confirmation of a reversal before jumping into TAN.
The play that is looking the most attractive at this point is another angle on the energy price spike. IDRV is an ETF that tracks electric vehicle related stocks. Unlike TAN, IDRV has just moved above its 10 day moving average and a bit oversold according to the MACD. The MACD is also forming one of my favorite pattern where it curls up to close a gap as the stock or ETF reverses. That combined with the incentives for EVs and the skyrocketing demand should move this one up quickly.
These setups are really about momentum. When you can identify when momentum is strong with room to run or, even better yet, ready to reverse and take off, you can really cash in. Joe Duffy’s momentum guide is a great place to get the most powerful setups to exploit clear signs momentum reveals. You can grab it here.
Keep learning and trade wisely,
John Boyer
Editor
Market Wealth Daily
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