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Will The Weekend Cold Front Oil Price Boost Push These Two Stocks Up? – Mike Swanson (02/16/2021)

With the markets closed yesterday, along with a Federal holiday, it was a slow news day in the United States. For some stock traders looking for action on Robinhood I’m sure it felt like a dull drug withdrawal. There are cold fronts going on all across America and my power went out for about ten hours on Sunday and many people where I live are still without power. In Texas there has been ice storms that have shut down much of the energy industry in that state. Many refineries are closed and even several major natural gas plants.

CNBC has reported that “Motiva Enterprises said it was shutting down its Port Arthur, Texas, manufacturing complex, which includes its refinery. Motiva’s Port Arthur refinery produces more than 630,000 barrels of product per day, making it the largest refinery in the United States.”

This isn’t the only refinery to curtail its operations and this has pushed the price of oil up to a new 52-week high yesterday and also forced natural gas to wild heights. Natural gas can be volatile so it should come back down to earth soon, but I’ll be curious to see if these two commodity stocks that I own breakout and go up this week.

The first is ConocoPhilips (NYSE: COP).

COP is an international oil company, but it’s based in the Houston, Texas area. Another stock I own is Mosaic (NYSE: MOS), which isn’t an energy company. It’s a company tied to the fertilizer business, which tends to trade closely with agriculture prices, which have been on a tear since I bought this stock last year late in the Spring. Frost and energy disruptions could help soft commodity prices in the US go up even more.

This stock is one of the top gaining positions in my main account. When you see a stock like this run the only way to get a good entry point is with pauses or pullbacks. One way to look for a simple pause is to use the 20-day Bollinger Bands. Look for those bands to squeeze to signal a consolidation pause that should lead to a coming breakout. The pattern is activated now on MOS, but you can create a watchlist of your favorite momentum stocks and track them and wait for any of them to bring this pattern to use as an entry point setup.

To find out about my favorite technical indicators and stock trading tactics grab my book Strategic Stock Trading.

Now the thing I am watching the most closely this week is actually the bond market. We have seen Treasury bond yields slowly creep up now for weeks and it is starting to impact corporate bond ETF’s. Take a look at the LQD ETF.

LQD is heading towards its 200-day moving average, which is the green line on this chart. If it were to close below that and its October support low of $132 in the coming weeks it would then complete a stage three top. This would make for perhaps one of the most important technical market events of this year.

I own some puts (leaps) on LQD. However, with options I never buy many and I am not a big options trader. With bonds they are just the simplest way to bet against them as you can’t really short bond ETF’s and I am considering this really as a hedge on long positions in my portfolio.

As I wrote a few weeks ago, I believe that what is slowly going on in the bond market is the most important market trend that no one is talking about.

Yesterday, I started something new and that is I am opening up my daily morning posts at the bottom for comments. My goal is to make this a water cooler type spot where we can talk about the markets together and share ideas. Check it out. If you got any questions or comments just scroll on down to the bottom of this post.

-Mike