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Time to Change Strategies as the Energy Crisis Continues

by | Oct 19, 2021

Monday was a huge day for the Global Energy Crisis coal names on our Fortune Research Weekly Watchlist. 

I hope all of you sold a little in that rally, because you should do exactly that every time we get a big rip like that…

Those stocks — Consol Energy Inc. (NYSE: CEIX) and Peabody Energy Corp. (NYSE: BTU) — were both down big on Tuesday. So if you missed out on Monday’s rocket ship move up, it was a great day to jump back in.

And with the United States Natural Gas Fund (NYSEArca: UNG) up the same day, you could have even financed a little of that… provided you’re monitoring all of the names on our watchlist.

All of those tickers will stay on our watchlist for now as we head into winter, but we are going to make a few changes this week.

First, prices for copper began to break out, so we need some exposure there. The easiest way to play that market is with its largest producer, Freeport-McMoran Inc. (NYSE: FCX), so that’s going on the list.

Next, I want to remove the iShares 20-Year Treasury Bond ETF (NYSEArca: TLT) and introduce an inverse-bond ETF, the Proshares UltraShort 20+ Year Treasury ETF (NYSEArca: TBT).

It does the exact same thing as shorting TLT, but we heard some comments that some folks couldn’t short the market… hence the adjustment.

Similarly, I want to introduce Proshares UltraShort Gold (NYSEArca: GLL) and the Direxion Daily FTSE China Bear 3X Shares (NYSEArca: YANG) into the mix.

Fortune Research Weekly Watchlist Adjustments in Foreign Markets

Chinese stocks are busting up against previous highs, so they could wind up on the short side of our free trade.

Source: Bloomberg

Gold prices failed to make a new high Tuesday, fading throughout.

Source: Bloomberg

The high back in May still represents a pinnacle that I don’t expect the precious yellow metal to reach again until the second quarter of next year… at the earliest.

There isn’t a liquid ETF whereby we could short South Korea or Hong Kong markets, so I’m pulling those off here…

Those markets are still terrible, but I don’t want to suggest anything on the watchlist where some folks might not be able to participate. If you can short ’em on green, you have my blessing — we just won’t be covering it so we can get more people in on these moves.

Adjustments in Crypto

On the crypto side, the Grayscale Ethereum Trust (OTC: ETHE) crushed it, and now I want to look elsewhere for crypto-adjacent offerings.

Sell to close any lingering stake in ETHE at market.

Marathon Digital Holdings (Nasdaq: MARA) is a Bitcoin miner that has an interesting overlap with the Global Energy Crisis. It uses the 37 megawatt Hardin Generating Station in Montana to power a nearby Marathon Bitcoin data center.

Yes, that’s right, they burn coal to mine Bitcoin. Crazypants, I know, but kind of cool.

As crypto prices go up, they make more money… And with the coins all signaling oversold, shifting to the fringes of the market seems wiser than holding the bag on any correction. 

A Couple of Exits and a NEW Watchlist Member

In addition, I’m pulling the ProShares UltraPro QQQ (NYSEArca: TQQQ) and the Direxion Daily S&P 500 Bull 3X ETF (NYSEArca: SPXL) off the watchlist.

Sell to close any lingering stake in TWWW and SPXL at market.

They’re both overextended here, and anyone who’s been following along these past few weeks should be profitable to the tune of 5% to 10%, depending on whether or not dips were bought like instructed.

Similarly, the Consumer Discretionary Select Sector SPDR ETF (NYSEArca: XLY) has been fantastic, running up 5.4% in less than a month.

Source: Bloomberg

However, it’s overbought here, and it’s time to move on to the next thing.

Sell to close any lingering stake in XLY at market.

In its place, I want to target one of the strongest names in the small-cap Russell 2000 over the past month and a half…

Avis Budget Group Inc. (NYSE: CAR) may not have had all those fun O.J. Simpson commercials like Hertz did back in the day, but it does have a much better business.

It’s up darn near 100% in just a month… And as travel picks up for the holidays, it’s only going to get stronger.

Source: Bloomberg

CAR is an absolute rocketship right now, so don’t chase. Buy a little at a time on down days.

It will be interesting to see where the market takes us, but with a long/short setup like we have in your Fortune Research Weekly Watchlist, we’ll be prepared regardless.

All the best,

Matt Warder

Fortune Research


WRITTEN BY<br>Matt Warder

Matt Warder

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