As you know I am quite bullish on energy after oil bottomed and in fact many oil stocks have been making new highs lately. For those who might argue that oil is only going up because it is priced in US dollars which have been very weak lately take a look at the chart below. I have USO (oil etf) divided by GLD (gold etf) which effectively gives you oil priced in gold. You will see a clear break of the downtrend there and what looks to me like much more upside ahead. Also, more on the decline in the US dollar later this week.
For those of you who are here looking for options expiration (friday) trades I suggest you focus very closely on the exchanges sector. I suspect ICE puts will be the trade of the week, but I have clearly been wrong on ICE lately. NYX has been closing at the lows almost everyday since it last made a new high and a top is blatantly obvious to me there. NDAQ has formed a small H&S on it's daily that will complete on a close below 36 (also the 50 dma). And ICE, well the chart looks pretty bullish, but I think the excitement over the vote after the close monday to merge with the NYBOT is way over done. In the least i would expect this to be a sell the news play and in the most it could start to drop fast monday morning and not look back all week. Thats just my gut feeling, you have too many people banging the table for $120 on expected news. Also, take a look at the open interest on the dec ICE options, there will be downward pressure from all those calls 95$ and up that recently went in the money. Im not a big believer in max pain theory, but max pain will certainly be lower than ICE currently trades.disclosure:
I own ICE puts and MEE calls.
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