Fuel & Trucking Disruption

That’s what can be expected from the Moving Forward Act.

Before we get started with any chart analysis, it’s important to note in the link above, submittal date for the bill was June 11, 2020; a full six months before ‘inauguration’.

Like the CARES Act (Speck relief bill) was submitted nine months before there was an outbreak in the far east, (the ‘relief’ bill was in the works for years), the Moving Forward Act was already making its way through committee long before the change in administration.

Just a short digression on CARES. Accessing the link above, one finds the original submittal date (January 2019, nine months before the outbreak) is nowhere to be found. History being scrubbed and re-written in real time.

Systematic destruction of the nation’s infrastructure is the plan; but the real target remains the food supply.

How does this knowledge help with Oil & Gas Sector analysis?

Supply disruptions could cause fuel prices (USO as proxy) to go higher while at the same time, drillers and producers go lower (XOP as proxy).

XOP chart analysis identified a potential set-up in this report.

That has proved correct thus far. Knowledge of the overall plan (supply disruption/destruction) lets us know the sector most likely is not coming back … not anytime soon.

Shorting XOP via DUG (not advice, not a recommendation) by repeatedly entering and exiting as required, could be a go-forward plan for months or years to come.

Looking at inverse fund DUG, the entry is shown. Price action retreated (testing) for two trading days before continuing on with its reversal.

It’s early in the move but there’s a potential trend line.

For inverse funds, trends in the hundreds or thousands of percent (annualized) are not unusual.

If the trend is maintained, a 100% gain on the position would occur right about the middle of April.

Stay Tuned

Charts by StockCharts

Note:  Posts on this site are for education purposes only.  They provide one firm’s insight on the markets.  Not investment advice.  See additional disclaimer here.

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