Three Trading Opportunities to Close Out the Week

Trading Opportunities - Three Trading Opportunities to Close Out the Week

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Welcome back! We’re excited to close out the first week of our new-and-improved Trading Opportunities e-letter with you.

This week, we’re focusing on oil, earnings season, and revisiting old favorites in our Strategic Trader trading research service.

Check them out below — and click here to learn how to get access to the full details on these plays.

Don’t have time to research new trades? Watch this now

Trading Opportunity No. 1: Oil

On Wednesday in Strategic Trader, we noted that crude oil prices have been steadily rising for the past two months as demand has increased. Supply has failed to keep up, and the inflationary pressures have jumped. We don’t see any significant change coming to this trend in the near term.

To take advantage of this bullish rally in oil prices, we are looking at adding a play on Stock A.

As an oil exploration company, Stock A benefits directly from increases in the value of crude oil. The more expensive oil becomes, the more money the company makes for every barrel it pulls out of the ground. It also makes money on natural gas, which has increased in value during the past few months as well.

Stock A recently announced plans to increase its dividend payment by 7%. That move is great news for shareholders who are looking for the company to not only increase its earnings, but to also pass those earnings back to shareholders.

Trading Opportunity No. 2: Earnings Season

On Tuesday, we reported that the market was doing well as investors digested more earnings data. We were particularly interested in the reports from The Procter & Gamble Company (NYSE:PG) and Johnson & Johnson (NYSE:JNJ), as they each gave us more clarity around commodity inflation and supply-chain issues.

Although earnings were good in both cases, the news was a bit mixed on inflation and supply-chain problems. However, organic growth was excellent overall and supports the case that consumer spending is still very strong, and demand is high.

We recommended taking advantage of this situation by reopening a position in Stock B as it bounces up off long-term support. The type of trade we recommended is a little advanced and carries some risk, but we feel that it is much more likely that Stock B will beat expectations and head higher.

Announcing: The “Inflation Trade”

We should also note that if investor sentiment remains very bullish, we may be able to score some profits before earnings.

Trading Opportunity No. 3: Reentering an Old Favorite

Lastly, on Monday, we put on a new play in Stock C.

The stock is bouncing up from a price support level near $92 per share following a surprise (and self-contradictory) downgrade by analysts at Baird. Analysts are concerned that labor and materials shortages will slow growth in the short-term but the outlook for 2022 remains very strong.

Similar concerns were expressed earlier this year when the stock was again in the $92-94 per share price level and buyers jumped in on the dips. Although the selling was surprisingly large last week, a bounce back after a downgrade is the normal M.O. for companies with positive growth rates like Stock C.

One Trade to Make Today

In the storage unit business, it is said that the four Ds — death, divorce, downsizing, and displacement — drive profitability. If the market stumbles in the coming months, which seems possible, then a stock positioned to profit from a decline makes sense; enter Public Storage (NYSE:PSA).

We would add “demand” as the fifth D to the list. Demand for extra storage has increased with housing prices. This correlation isn’t new, and it means storage looks relatively good, regardless of market volatility.

The #1 Trade You Should Make Right Now — Details Here

Although the dividend yield on PSA is good, like most REITs, most of the payment is an “ordinary” dividend subject to a higher tax rate. So, talk to your tax adviser about how to shelter that income.

So, today, you can grab some shares of PSA stock for up to $330 per share.

Summing Up

Every week, we’re going to share with you some details on the plays we recommended in Strategic Trader, our trading research service.

To get the full details on our trades on stocks A, B, and C, join us here to learn how.

Now, you may have noticed that we mentioned options plays a few times — and if you’re one of those folks who get skittish when the word is dropped, we understand.

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We’ll be back with you on Monday with more trading opportunities.


John Jagerson and Wade Hansen
Editors, Trading Opportunities

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