The Nasdaq is now in correction territory — and we’ve avoided the slide by following our momentum measurements and the activity of executive buying patterns. So, while everyone else is panicking over Big Tech earnings… we have our focus on one man.
Warren Buffett.
The Oracle of Omaha has been the source of my favorite trade of the last 18 months.
You see, Buffett has been buying up shares of Occidental Petroleum Corp. (NYSE: OXY) over the last two years. Occidental is a major oil producer with significant acreage in the Permian Basin, a Texas production region that sources the largest percentage of U.S. oil output.
Buffett started buying OXY shares on March 2, 2022, at $50.88 each. Berkshire Hathaway’s (NYSE: BRK.A) first purchase totalled a stunning $3.12 billion. That would be the cheapest purchase for Buffett as he would spend billions more between a range of $56.00 and $59.00 in 21 more purchases between then and now.
But yesterday, Berkshire did something that it hadn’t done before with OXY.
It bought shares ABOVE $60. That’s an incredible opportunity for traders to take advantage of this new price level. Let’s dig into it.
Why Berkshire Goes Above $60 on OXY
OXY has fluctuated between a range of $56 and $66 over the last 18 months. Shares went back to the top of this range in October as tensions heated up across the Middle East.
But shares pulled back earlier this week. Buffett snapped them up again when the stock fell to about $62.50. Why shares pulled back have little to do with anything negative around OXY, and more to do with one of its largest competitors in the Permian Basin.
Occidental’s presence in Texas is unmatched, it’s the largest landowner in the Permian, one of the lowest cost production regions in the Western Hemisphere. Following Exxon Mobil Corp.’s (NYSE: XOM) recent purchase of Permian-based Pioneer Natural Resources Co. (NYSE: PXD), a lot of investors anticipated that Chevron Corp. (NYSE: CVX) would also make a big splash in the Texas oil fields.
Any dealmaking in that region would boost OXY’s assets. In fact, The Wall Street Journal even reports that Chevron explored a deal to buy OXY earlier this year. But Chevron — aided by concerns about U.S. energy policy — spent its money on oil giant Hess Corp. (NYSE: HES), which has no Permian presence.
With a recent slide in oil prices — aided by profit taking by hedge funds — OXY pulled back to this lower range. And Buffett viewed the price dip as an opportunity to buy.
Buffett has been buying up this stock — and it’s fast become my No. 1 Energy Supercycle Stock — one that can generate incredible trades for anyone looking to use Buffett’s insider buying pattern as a floor for one of my favorite trades.
What I love about this recent purchase is that it raises the floor for OXY in the future, which only aids our high-probability trades using options. I’ve put together a very simple presentation on how these trades work, and why OXY is such an incredible stock to trade RIGHT now.
Don’t miss out.
Chat soon,
Garrett Baldwin
*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
P.S. Terrible Market Got You Down?
Yeah, I get it… Trading this market is exceptionally tough right now.
Leaving some traders disgruntled, frustrated and even disheartened…
But hang in there…
Jack Carter and Lance Ippolito have something for you… something based on a certain type of options trade…
And in particular, one that’s known to often pay out overnight…
Now, I know that sounds silly considering most people are not bullish right now…
But they’re hosting a free session Friday where they’ll show you how to trade something called an “overnight option.”
And we expect this to happen a lot in November.
If you want to check it out…
Market Momentum is RED
Markets remain under significant pressure this week, and we’ve moved into the Fear stage of this situation. The S&P 500 is trying to find a bottom in the short term. The Russell 2000 is now in a complete freefall.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
