BY ANDREW GIOVINAZZI
June 13, 2024
Yo Pit Crazies,
Don’t forget to sign up for the Option Pit Event in Chicago. Mark, Licia, Frank and myself will be there with days of option learning and live trading to pay for the trip.
The rate of inflation is slowing somewhat this last month but prices are still rising over the Fed target of 2%. That was enough to get Fed Chairman Powell to reduce to 1 the chance of a rate cut this year. One of these days he will say the phrase runaway government spending.
That was enough to get stocks to all time highs, led by Apple Inc (Ticker: AAPL) which finally found the right AI message in Apple Intelligence. AI will be the upside gift that keeps giving and like the internet before it, many company will eventually benefit but right now there are only a couple of winners in Nvidia Inc (Ticker: NVDA), Microsoft Inc (Ticker: MSFT) and Alphabet inc (Ticker: GOOGL).
What is not winning is oil. Now below is the price of the US Oil Trust (Ticker: USO) and that is up over the last year. I am reading reports of the Saudis dumping the dollar for other currencies to buy oil. Since I get all my news on the internet now I need to wait a few days until what I see is actually true. Bill Griffo had talked about this over the last year and it is now coming to pass.
1 year chart of USO
What I do not get with stocks at all time highs is why oil stocks are doing goofy things.
Like this.
Apache Corp (Ticker: APA) is at 1 year lows
I like a mix of growth and income stocks. Right now, the growth stocks led by AI are paying the bills on the upside. Every chip stock I own is at crazy prices. I am reminded of the 2000 time frame where some stocks did crazy things but came back to earth.
Some oil income plays are looking good to me. I am writing some puts on APA and other oil stocks now for income. Eventually I will scale out of some of the chips, maybe never, but the demand for energy will be never ending from AI.
APA 1 year chart
If Saudi Arabia is leaving the dollar, that won’t be good for US Treasuries since folks won’t need to buy them with their dollars. That will be another story but not a win for the current administration. Oil and Nat Gas will still be ever more necessary no matter who is in the White House.
To Your Trading Success,
-AG
Andrew Giovinazzi
30-Year Trading Pro
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