Texas’ Energy Crisis Just Fortified This “Old School” Trade

Clean energy is one of the strongest sectors I’ve ever seen in this market – especially right now.

Companies like SunPower Corp. (Nasdaq:SPWR), First Solar Inc. (Nasdaq:FSLR), and Canadian Solar Inc. (Nasdaq:CSIQ) have given my Night Trader readers the chance to add thousands of cumulative percent worth of return to their portfolio of my recommendations, and we’re only getting started. (Call 1-877-211-3024 to learn how to join them.)

But something weird started happening a few months ago…

The “old school energy” trade – that’s what I call the traditional oil and natural gas companies – started to get a strong bid right as their sectors were hitting multi-year lows.

Why? Well, most investors see 2021 as a year of renewed expansion in the global economies, which would in turn raise oil prices by the end of the year.

But what started as a few upgrades to year-end prices is now rapidly gaining speed. Renewed growth and inflationary pressure have caused some analysts to raise their oil price forecasts to over $100 per barrel.

The move in oil prices comes while the “clean energy” movement has been gaining ground and popularity as well. For the last few weeks, in fact, we’ve seen “clean” and “dirty” energy stocks increase in tandem.

And this past weekend is going to turbocharge that move.

[I talked all about old school energy stocks in the latest episode of The Profit Strategies Podcast, Finding Profits in the Oil Market. Listen right here.]

Texas is experiencing a rare snow storm. One that has led to electrical grid problems that have put millions of consumers in the dark, literally, and the cold.

The state’s frozen wind turbines are adding to the problem on the power grid – and that has traders looking away from clean energy, straight back to the natural gas and oil markets. They’re putting the star quarterback in to save the game after the new rookie threw a few interceptions.

Now, the surge we’re about to see in the “old school” energy names is not happening because clean energy has failed. It’s because clean energy solutions are still early in the acceptance phase – like a rookie quarterback that is still learning the entire offense.

If you want to increase your returns in the first half of 2021, I suggest adding exposure to these “dirty energy” names, especially as the winter season takes our southern states in a chokehold.

In fact, here are two you can add right now for a 30% return over the next quarter…

Energy, Online Shopping, and Crypto – Where to Put Your Money This Week

Oil and energy isn’t the only sector to watch this week – but due to the situation in Texas, it’s wracked with what could be the biggest profit potential of the week. And there are two names in particular that you should watch right now…

  1. SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

This is a great way to play the new bullish trend in energy prices. The XOP ETF mimics an index derived from the oil and gas exploration and production segment of a U.S. total market. Companies like Exxon Mobil Corp. (NYSE:XOM), Occidental Petroleum Corp. (NYSE:OXY), and Marathon Oil Corp. (NYSE:MRO) make up the top holdings from the 42 companies that are represented in the ETF.

The XOP shares have nearly doubled since November and are heading for another 25-30% return over the next quarter as the crowd starts moving even more money into the sector this month.

From a technical perspective, the recent rally has the ETF moving into a long-term bull market rally as shares cross above their 20-month moving average for the first time since late 2018.

Higher oil prices and demand along with inflation – and now, the added concerns that will be made after this weekend’s energy grid problems in Texas – make the XOP a perfect balanced addition to a clean energy portfolio for now.

  1. Exxon Mobil Corp. (NYSE:XOM)

Oil is just one facet of the “old school” energy trade. You’ve got to include natural gas in that mix as well, and this area of the market is about to go vertical.

Again, the problems in Texas are revealing weaknesses that will be remedied, and one of the solutions will be an increase in demand for natural gas.

We almost always see seasonal demand for natural gas go higher in the winter as usage spikes in the cold weather. The news from the weekend will embellish the price fluctuations over the next week or so.

Natural gas prices are more sensitive to short-term trends than crude oil companies. For that reason, it is smarter to hedge the volatility by trading companies that are exposed to both natural gas and oil. One name that stands out to fit the bill is XOM.

XOM shares just finished a golden cross pattern in January as the stock’s 50-day moving average crossed above its 200-day trendline. That pattern suggests that price momentum is growing on this large multinational oil and gas company as energy demand increases.

The stock has already traded out of its long-term bear market trend, resulting in an upgrade to its price target from $50 to $60.

But as I said before, oil and energy stocks aren’t the only ones getting a boost this week…

Online Shopping Is Getting Ready to Soar

This weekend, Mastercard Inc. (NYSE:MA) announced that their analytics tracked the first monthly increase in department store shopping in more than a year.

Of course, the pandemic is the reason for the consistent decline, but the reason for the sudden increase is just as practical… people spending those lovely gift cards.

That’s right, shoppers donned their masks through the month of January to drive out to the malls and stores to cash in on that annual holiday tradition, the Gift Card. We’re seeing that strength come through in some of the stocks as teen retailers like American Eagle Outfitters Inc. (NYSE:AEO) and Abercrombie & Fitch Co. (NYSE:ANF) are trading at multi-year highs.

At the same time, shares of larger department stores are starting to lag the retail sector ever so slightly. But there’s a group of online retailers that are getting ready to report their quarterly earnings that I’m focused on like a laser: the smaller online retailers.

Shares of Etsy Inc. (Nasdaq:ETSY), Stitch Fix Inc. (Nasdaq:SFIX), and other smaller online retailers are preparing to provide their quarterly results to the market in the next few weeks.

I bring this up for a very specific reason…

These stocks have a strong “buy-the-rumor” pattern going for them over the last year.

We recently saw this pattern play out on Pinterest Inc. (NYSE:PINS) shares a few weeks ago. Shares of PINS shot from $65 to $85 in the days ahead of its earnings release as traders piled into the stock before the numbers.

PINS delivered a great quarter’s results, as expected, but the buying had already taken place. As a result, we saw PINS shares dip just a bit before beginning to head higher again.

I’m putting you on alert that we should expect to see some similar moves in ETSY, SFIX, and a few others – Chewy Inc. (NYSE:CHWY) will report in early April – over the next few weeks. And with those reports comes a potential opportunity to grab some of these “buy-the-rumor” profits before the rest of the market.

After running to $110, shares of SFIX have retreated to their 20-day moving average where they are preparing for another break higher.

The 50-day moving average remains in a strong bullish trend as the company prepares for earnings on March 8. The company’s second quarter 2020 earnings report saw a 20% rally ahead of its announcement as traders speculated on an earnings beat.

I’m expecting a rally towards $100 over the next two weeks, which would generate another 20% “buy-the-rumor” rally.

Now, there’s one more group that’s hitting headlines this week – and it could be the most profitable of all…

Cryptocurrency: Hitting New Highs Yet Again

At the end of 2017, people couldn’t believe it when Bitcoin hit $20K. The top cryptocurrency turned many average joes into millionaires.

But now, it’s gone even further.

Bitcoin just hit $50K – and then some – for the first time ever. And unlike last time, it’s not just retail investors jumping into the coin. It’s major companies.

Tesla, Mastercard, and BNY Mellon have all dropped big money into the cryptocurrency sector.

It’s clear that this crypto surge is vastly different from 2017’s bubble. And even though the market currently sits at all-time-highs, it’s still not too late to get in.

My colleague, Tom Gentile, predicted Bitcoin’s last surge. And this time around, he sees the top coin hitting $100K in the next 10 years.

But get this – you don’t have to buy Bitcoin to invest in cryptocurrency. The market is fraught with smaller, virtually unknown coins that tend to move in tandem with BTC.

Tom has recommended a variety of these coins to a small group of his readers. And in February alone, some of his best recommendations have been closed for gains of 200%, 300%, and even 1900%

Some of these gains took about a year or two to rack up – but others occurred in less than one month.

Cryptocurrency is on a tear. If you aren’t cashing in yet, now’s the time to do it. And Tom will show you the best way to do just that right here.

I see a potential windfall of cash coming your way soon…

Chris Johnson

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