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Trade of the Day: Marathon Petroleum Corp. (MPC)

Try this energy trade to fuel your portfolio

   

The entire oil sector is starting to look a little stronger as growth expectations pick up. From a sector-rotation perspective, this is about the right time for that to happen and should help support the current rally. We are opening a position on Marathon Petroleum Corp. (MPC) following a breakout of an inverted head-and-shoulders pattern. That pattern was completed just following its earnings report and has been shadowed by several other companies in the sector. Our upside projection at this point is $90 in the very short term where we would not be surprised to see some consolidation.

Oil stocks can be sensitive to a stronger dollar, which has been an issue since February. Worries that the Fed may start to taper a little have been partially driving that strength. This is a concern to us and is probably one of the biggest risks in the trade. However, the decline in the dollar Monday near its historical high is encouraging and we feel it supports our timing of this position. We will keep a close eye on both the energy-sector and the dollar for signs of trouble, but for now this looks like an ideal entry opportunity triggered by a classic bullish technical pattern.

Recommendation: Buy to open the MPC June 85 calls (MPC130622C00085000)

InvestorPlace advisors John Jagerson and S. Wade Hansen are co-founders of LearningMarkets.com, as well as the co-editors of SlingShot Trader, a trading service designed to help you make options profits by trading the news.  Get in on the next trade and get 1 free month today by clicking here.


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