ALERT! - Energy Short Squeezes - January 7, 2018

publication date: Jan 7, 2018

Cerundolo Investment Research    

CIR ALERT!  

Volume 2, Issue 1
January 7, 2018

Download PDF Version here


Attractive Energy long ideas where the shorts have been adding and likely wrong.

Items of Interest:

With crude oil advancing and energy stocks attracting attention and new money, we wanted to take a look at those stocks within the sector that have attracted shorts and showing technical improvement.  These stocks are what’s called “Type 1 short squeeze candidates”.  As these stocks grind higher and the short either add to their positions or stay at current levels, they will eventually be forced to cover and propel these stocks higher…much higher!

The short squeeze data is provided by Phil Erlanger of Erlanger Research and a former colleague of mine when we worked together at Fidelity Investments.  I have been using the service many years for both long and short ideas with very good success.  If you are interested in learning more, please let me know.

Of the 53 Type 1 energy stocks reviewed, we highlight 28 that we believe are worth keeping an eye on and should be considered longs either here on with a bit more technical improvement.  Each weekly chart is presented on an absolute and relative basis to the S&P 500.  Circled in green are areas highlighting price and or relative trends have inflected higher and in some cases where more strength is needed to do so.

Stocks such as Valero (VLO) are on the short squeeze list-stay long.  It was not covered here for the simple fact that it is extended above its base support area and not a great spot to initiate a long position.  On the other hand, Marathon Petroleum (MPC) is on the list and covered here. This stock has emerged from a 2+ year base and improving on a relative basis. 

 

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