So, as it stands right now, oil, in particular WTIC in the US, bounced off of its resistance point at just over $65. After a few days of sell off, the commodity is back up today. In Canada, WCS is trading at around $49 USD, a discount of about $15. This is cheap and CANADIAN ENERGY STOCKS have been absolutely hammered in the last two years. We’re held on to our positions and have been adding to them as the prices dropped. We suspect that this year we’ll see a rebound in CANADIAN ENERGY STOCKS which will see stocks like PD.to, CPG.to and BIR.to hit some of their old highs. PD.to is the most volatile, BIR.to has the best dividend (aside from SGY.to), but CPG.to fell the most in terms of price and so, most likely, also has the most room to move up. Now, BIR.to is a NATURAL GAS producer but those stocks usually do well in the summer and can often trade in tandem with their oil bretheren.
Further, many of the large cap stocks have already made their move earlier in the year so the fact that these smaller stocks are moving up now suggests that we’re in the second stage of a rally. Is it a bull market exactly? Hard to say, but we are looking at these charts and seeing that many of these stock prices have hit oversold territory with their RSIs for the second time, which is often a good time to buy.
We know we’ve talked about CANADIAN ENERGY STOCKS before in the spring time only to have them fall into a massive bear market but, we think this time is different. We think that this rally will last into the early summer months due to the very nature of many of these stocks being greatly over sold. Further, like last year, the price of oil dropped in May but this year we’ve already had a drop in the price. The charts are suggesting a rebound is underway.
So, all that being said, we will be looking to sell a bunch of COVERED CALLs on many of our holdings once WTIC gets closer to its old high. Some stocks have Weekly options while quite a few only have Monthly options. We’ll have to time our trades appropriately.
Here are the charts of our three ENERGY stocks:
And here’s a list of other ENERGY STOCKS we track: