Buy Alert: July 29, 2014

| July 29, 2014 | 0 Comments

Buy Alert: July 29, 2014


Option Strategy:

Buy Noble Energy (NBL) September 19, 2014 $72.50 calls for $1.15 or better.


Commodity Outlook: Energy

Energy commodities are all over the map. WTI crude is in a volatile range between $100 and $104, while natural gas is sliding to lows not seen since November 2013.

Unfortunately, energy market uncertainty has sent the vast majority of oil and gas explorers lower in recent weeks.

But here’s the deal…

The recent pullback in this industry is creating some outstanding buying opportunities.

Remember, with the Energy Select SPDR (XLE) remaining in an uptrend, the odds still support bullish positions in the oil and gas industry as a whole.

Here’s how we’re going to play it…


Resource Company: Noble Energy (NBL)

NBL is an international oil and gas producer with operations in the US, West Africa, China, North Sea, and Eastern Mediterranean. The company reported adjusted earnings above analyst estimates on July 24th.

However, in their earnings call, NBL hinted at problems with takeaway capacity in their quickly growing US shale operations. As you may know, the lack of sufficient pipelines in rapidly growing shale plays is hindering production for many companies.

Upon hearing third quarter production will likely be lower than anticipated, investors sold NBL down to the $68 area.

But listen to this…

Even though NBL disappointed with their production forecast, top-tier brokerage firms like Morgan Stanley and JP Morgan Chase are reiterating their “Buy” ratings this week.

What’s more, both firms have price targets of $84 or higher.

Given the short-term oversold nature, along with the bullish outlooks from Wall Street analysts, NBL shares are poised for a substantial bounce in the near future.

Don’t delay in buying the NBL September 19, 2014 $72.50 calls for $1.15 or better.

The current bid/ask spread for this contract is $0.85/$1.00.

Do not pay more than $1.15 per contract!

Our official entry price for performance tracking is $1.00. Your price may be higher or lower.

Exit Strategy:

Noble Energy

Remember, we want NBL to trade higher. Our first profit target is the $73 resistance area. We may see additional gains for NBL if bullish price action returns to the oil and natural gas markets. In such a scenario, NBL may jump to our second profit target at $76.

The risk control price for this trade is $66.50. If NBL trades below that level, conservative investors should consider closing this trade to conserve capital.


Category: Commodity Trading

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.