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My indicators are flashing bullish readings this week, a mild improvement from last week’s neutral-to-bullish readings. Stocks have enjoyed the strongest open to a new year since 1964, and that’s encouraging to see following the record-setting advance we got in 2017.
I think that the holiday-shopping season will lead to positive earnings readings for some of the stronger retail stocks, and that could lift the sector as a whole. Additionally, retail is still undergoing a short squeeze right now, as is the energy sector with WTI crude oil above $60 per barrel now.
An explosion at a major oil pipeline in Libya was one reason for the spike in oil prices, but we’re also seeing geopolitical tensions rising in Iran where there are now ongoing protests and significant political unrest. The protests are not having a direct effect on oil production, but they seem to be making oil investors a bit more fearful. It also appears that the Organization of the Petroleum Exporting Countries (OPEC) is really trying to be disciplined and maintain its production cuts because Saudi Arabia desperately needs oil prices to go higher.
In this environment, today I’m recommending a bullish play on Devon Energy Corp (NYSE:DVN):
Buy to open the DVN Apr 48 Calls (DVN180420C00048000) at $1.10 or lower.
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