Jim Cramer Finds A Diamond In The (Rough) Oil Patch

Adam Feik - INO.com Contributor - Energies

What a week for oil and energy. Okay, I know... what a 6 months! Ugh!

In case you're living under a rock (or just need a succinct summary of the carnage of late), oil has dropped about 2% or more every day this week except Tuesday, and looks on track to do so again today (Friday, Dec. 12th). All told, WTI oil prices as of mid-day today have dropped below $58, representing a decline of more than 46% since the commodity’s June 20th closing high of $107.95. In that time, natural gas prices and energy stocks have both given up about 25%, based on the US Natural Gas ETF (NYSEArca:UNG) and the Energy Select Sector SPDR ETF (NYSEArca:XLE), respectively. The Market Vectors Oil Services ETF (NYSEMKT:OIH) meanwhile, is off about 38% since oil's slide began.

Interestingly, this week's big shellacking has seen both oil and the dollar move lower, with the DXY index losing a little more than 1%. Natural gas prices are actually moving higher, and UNG's chart looks to the naked eye like this week could mark the beginning of a bottoming formation.

One small group that's bucking the trend

Last week, I highlighted Enbridge Energy Partners (NYSE:EEP), the Houston-based US affiliate of Calgary-based Enbridge (NYSE:ENB). EEP, ENB, and some other pipeline stocks have been (knock on wood) somewhat bucking the devastation in oil and energy. Accordingly, EEP and ENB continue to be among the only energy investments sporting green Trade Triangles in my MarketClub portfolio.

As fate would have it, ENB made impressively good news the last couple weeks, making a big enough splash to get the CEO invited on for a guest appearance on – wait for it – Jim Cramer's Mad Money show on CNBC. Whatever your vibe about Cramer, you ought to take 8 minutes and watch CEO Al Monaco's performance (here). Continue reading "Jim Cramer Finds A Diamond In The (Rough) Oil Patch"

Go Nuclear

Adam Feik - INO.com Contributor - Energies

What’s working right now in the energy sector?

I’ll give you 6 ideas in this article.

I track over 100 energy investments in my MarketClub portfolio. My list includes drillers, refiners, shippers, coal, solar, MLPs, and pretty much every other corner of the sector. Today, out of 100+ candidates, only 6 are registering a green Trade Triangle signal for both the long-term and intermediate-term trend. (Green Triangles are a sign of a trend that remains intact and invest-able, although the Triangle system does not purport to capture the exact high or exact low point of any trend).

Here are the 6 diamonds in the rough:

The first two – and this deserves a groan, I admit – are "short" oil funds. I’m not telling you anything you don’t already know to say that oil prices have been plummeting since this summer. As a result, short funds are among the few energy-related investments that have performed well lately... and extremely well, at that. "Short" funds, of course, profit when a market declines, so if you want to bet that oil prices will continue to fall, DDG and DUG continue to display all green Trade Triangles. 

DDG is the ProShares Short Oil & Gas fund, which is designed to deliver one-to-one inverse performance (-1x) compared to oil prices. For a slightly higher-octane version of the same strategy, use DUG, which is the ProShares Ultra-Short Oil & Gas fund. DUG is sold as a -2x, or two-to-one inverse fund. Be advised, both DDG and DUG can be highly volatile, and much of the "easy money" has likely already been made! So keep a sharp eye on either of these investments and/or use tight stop-loss orders.

The next two "in-favor" energy investments are related to uranium. Hence, the title of this article to "go nuclear." Last week, INO.com posted a fantastic interview of Casey Research’s Marin Katusa, author of the new book, The Colder War. In the interview, Katusa touted Uranium Energy Corporation (UEC), which happens to be one of the few energy investments with green Trade Triangles right now. See the interview for some of Katusa’s interesting observations and insights about the company. Caution: Katusa advised being highly selective in the uranium category, and indeed, out of a dozen or so uranium companies on my watchlist, UEC is the only pure uranium play that’s working right now. The second uranium-related investment is not a pure play, but rather a fund that invests mostly utility companies involved in nuclear power generation. The fund is the Market Vectors Uranium + Nuclear Energy ETF (NLR). The fund’s sponsor says the fund’s objective is essentially (paraphrasing) to invest in companies whose long-term strategy is to either derive 50% of their business from uranium or to be substantially involved in nuclear power. Only 2.4% of the fund is invested in companies considered to be part of the energy sector, while over 70% of the fund operates within the utilities sector. While not a pure energy play, NLR does aim to profit from nuclear power, and right now the strategy is working (as evidenced by recent performance). Continue reading "Go Nuclear"