6/1/22 Energy, Oil, Shanghai, & Russian Oil Bans

News:

Yesterday, markets began the day by falling about 1.5% in the first hour of trading. But by the end of the day, the three major indexes had all touched positive territory before settling near a 0.5% loss.

The Russell 2000 underperformed, falling 1.3%.

The cost of crude oil reached $120 a barrel before settling near $115. The price is rising again this morning, trading at $116.50 at writing.

Energy is the top story for the market. Here are the driving factors.

Shanghai has lifted COVID restrictions on its 25 million citizens. The lockdown lasted about 2 months. With China largest city reopening it’s reasonable to expect energy demand to increase.

On the other side of the continent, the EU and UK are implementing a ban on insuring ships carrying Russian crude oil. They also plan to implement an embargo restricting 90% of Russian oil by the end of the year.

The move will likely cause supply issues.


Photo by Korie Jenkins from Pexels

Energy stocks gapped up only to close the day down.

With increasing demand and decreasing supply expect energy to stay front in center as the markets navigate the rest of 2022.

My favorite energy stocks right now are Devon (DVN)^ and Tesla (TSLA)^.

It’s worth noting that the only sector to finish in the positive was Consumer Discretionary. Looks like the market is trying to go risk on…

Technicals:

The technical picture is cloudy.

Let’s look at the S&P 500 over the past year.


SPY Daily Candles – Chart via thinkorswim

The index closed above a major support line for the second day in a row. The days happen to staddle a long weekend too.

The market is showing some resilience.

An encouraging sign came from the VIX which fell yesterday despite the market losses. This is a positive sign for the bulls.

However, there’s a ton of overhead resistance still to get through, as shown on the chart above..

Timing:

It’s still a mid-term year. Q2 and Q3 are typically the weak spot in the 4-year cycle.

My goal is to survive until Q4. If the crisis situation remains the same we can expect an epic rally.

Watchlist:

*Low Float
^Open Position

*XELB is on watch
*AMR has support at $160, resistance at $180
TNK has support at $20
CNCE has support at $5
^HDSN has resistance at $10
PANL has support at $6.65
LPG has support at $16
SD has support at $21
SIGA is on watch
CTT is on watch
PLAB has resistance at $20
ESTE has support at $17
BORR has resistance at $5.60
TTI has support at $4.60
HRB has support at $34
CIB has support at $44
UNM resistance at $36.60
AR has support at $40

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