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Today I’m recommending a bullish trade on Marathon Oil Corporation (NYSE:MRO). Commodities are actually one area of the market that is presenting a real bargain right now, and as we enter October, a month in which several significant market crashes have occurred in the past, there is the potential that we could see some negative action.
We are in what I would refer to as a very dangerous period for stocks, especially after the advance we’ve seen lately. So it’s very important to remain defensive and, as usual, have some portfolio insurance in case stocks decide to pull back.
On the positive side, the U.S. economy is booming right now. On Thursday, the final reading for gross domestic product (GDP) came in at 4.2% for the second quarter of 2018, nearly doubling the prior quarter’s 2.2% rate.
In my view, that’s giving President Trump the support he needs in the ongoing trade negotiations with China, Canada and Mexico. However, the trade war is still a big factor that could eventually impact the market, as the U.S. doesn’t seem to be getting along with its negotiating partners around the world.
Until some of this gets resolved, the trade war will continue along in full swing. Nonetheless, the market is acting as though everything will be fine, but there’s just no way to know for sure what is going to happen.
In commodities, however, oil prices have been on an upswing for the past three weeks, and I think they will continue to move higher. Venezuela, which used to be a major supplier, is generating hardly any oil right now, and a lot of production has also gone offline in Iran. With supply still pretty tight, I’m expecting oil prices to keep rising, and that should benefit energy companies like MRO.
Buy to open the Marathon Oil Corporation (MRO) Jan 2019 25 Calls at $1.05 or lower.
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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.