We’ve opened a new bearish trade on Marathon Oil Corporation (NYSE:MRO). Oil companies have had a short reprieve from falling oil prices over the last couple weeks. Although energy prices have been flat, many oil stocks like MRO have rallied. We think this is a “bull trap” that will spin back around as these companies hit resistance. In MRO’s case, we think $28.50 has a very good probability as resistance that will send the stock back down to prior lows.

The recent rally has been at least partially due to plans to cut production in 2015. In MRO’s case, that means 20% fewer expenditures on development, which will save costs but it also constrains growth. The argument many oil-stock bulls are using now is that if all the oil companies cut production like this, it will bring energy prices and margins back up.

That sounds good if everything else remains equal, however, if recent data from Japan showed us anything it’s that economic growth around the world is continuing to shrink. Cutting costs isn’t the same thing as growth so we like a bearish position in MRO to take advantage of the likelihood that oil stocks are overbought.

Buy to open the MRO February 28 Puts (MRO150220P00028000) for a maximum price of $1.60.

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