How You Can Profit from Chaos in the Oil Market

This post How You Can Profit from Chaos in the Oil Market appeared first on Daily Reckoning.

The energy market’s in chaos.

And today we’re going to profit from the confusion. Here’s what I mean…

In the good ol’ days before October 2014, all the hotshot analysts agreed the price of oil would hang out around $100.

Listen, the Wall Street crowd doesn’t want to rock the boat. That way if they’re wrong, they’re wrong with the pack. They can all hold hands and go down with the sinking ship together—and keep their high-paying jobs, of course.

But we all know how their predictions turned out.

Today, things are different. The oil crash is forcing energy analysts to actually make independent forecasts. And analyst forecasts for black gold are all over the place right now. Some of the smartest guys in the room think oil will drop to $20 in short order. Others see Texas tea zipping back above $70 before July. That whole safety in numbers thing is falling apart—and no one knows exactly what to do about it…

Click on chart to enlarge

Bloomberg reminds us of the “chaos in the forecasting business” that we’re seeing right now. “Energy analysts are more divided in their outlook than at any time in at least eight years,” the financial news giant reports.

But the good news is that you can profit from the confusion.

While all these smarty-pants analysts argue over how low the price of oil might go over the next six months, the charts show crude is actually starting to bounce here. And that means we have the potential to see massive rebound trades in the energy sector…

Look, we don’t need oil prices to magically rocket back to $100 to see killer gains trading energy. We’re not looking at long-term fundamentals. Heck, just look at some of the action from these beaten down stocks yesterday and you’ll see exactly what I’m talking about. Many of the energy names that had been absolutely crushed since the fall jumped as much as 10% on the day.

If you’ve been keeping up with us here at Rude HQ, you know we’ve been riding a potential energy stock rebound since early March. Our Pioneer Natural Resources (NYSE:PXD) trade is up about 15%– and we expect even more in the days ahead…

We turn to our resource guru Matt Insley for a little guidance sifting through the shale rubble:

“You need to pick your shale producers on their ability to reduce costs and produce the cheapest oil they can,” Matt says. “Last year at this time it was ‘drill baby drill’ – well, today it’s more like ‘save baby save!’”

Let the oil analysts step all each other to figure out the price six months or a year from now. While they’re distracted we’ll sneak in and follow the shorter-term trend for double-digit gains. Remember, we’re not married to any long-term forecast. And we don’t need oil to go to $100 to make a fast buck.

We’re staging a hit-and-run raid on the energy market today. So lock and load…


Greg Guenthner?
for The Daily Reckoning

P.S. The energy market’s in chaos. Today we’re going to profit from the confusion.  If you want to cash in on the biggest profits this market has to offer, sign up for my Rude Awakening e-letter, for FREE, right here. Stop missing out. Click here now to sign up for FREE.

The post How You Can Profit from Chaos in the Oil Market appeared first on Daily Reckoning.