Posted in
Current Events
By: Tom Gentile
on February 14th, 2023
Happy Bullish Energy and Oil Day!
Wait, what? Isn’t it Valentines Day you may be asking? Yes it is.
But it is also the start date for what I have studied and come to know as a seasonal pattern I deem the Bullish Energy and Oil Pattern.
It isn’t so much a day, but rather a 5-month batch of days where Energy and Oil typically trades higher in price.
I use the ETF USO, which is the United States Oil ETF as my representation for Oil. The United States Oil Fund (USO) seeks to provide investment results corresponding to the daily price movements of West Texas Intermediate (WTI) light, sweet crude oil.
It is deemed more suited for short-term investors who can regularly monitor their positions and who are bullish on the short-term futures contracts on WTI crude oil.
As Investopedia.com states, because the ETF’s benchmark is the WTI crude oil futures contract, the fund may experience *Contango when rolling the futures contracts. That situation is deemed unfavorable for long-term investors, which is why the assessment is USO is better suited for short-term investing.
The Bullish Pattern on Oil
The pattern runs between mid-February to mid-July, and it has worked more often than it doesn’t. In fact look at the info from my 2023 Energy and Oil Opportunity report found here www.tomgentile.com.
USO started trading in April of 2006.
The range of months this sectors bullishness occurs more so than any other consecutive 5-month period of time is mid-February to mid-July.
The first year for USO’s existence had it available in April do we can’t use that year when compiling stats for how USO performed since its inception.
That gives us 16 years where we can provide statistics.
Remember, I am using USO as my representation for this seasonal bullish pattern.
In 12 of the past 16 years, we can use that 5-month period of time, USO has traded higher. Meaning the closing price on the 16th of July (give or take a day or two) was higher than the opening price on the 14th of February (give or take a day or two) all but 4 years since 2007.
That is a success rate of trading higher over this period of time is 75%. That is an acceptable rate of success for me that has me gearing up for bullish option opportunities in energy and oil every year.
Even the first year USO started trading, the open price on April 17, 2006, to mid-July of that year USO traded higher.
This is what the chart looks like for USO. The move from the beginning to the end of the 5-month seasonal time frame saw USO trade higher in the close to a 15% higher result.
Note: Even though one can trade the securities themselves, my team and I are options traders and so we look to initiate bullish option trades on these instead. We like to go for a better ROI on our money and options allow us the chance to do that.
App: Toms Option Tools
Market Insight articles may show images of lists of stocks meeting a variety of options parameters like Unusual Call and or Put activity or Expensive IV found on my app Toms Option Tools.
Other times I will have other charts may work to amplify my educational points.
Those options data lists, however, can be found on my app Tom’s Option Tools. Use your device to search up and download this app and get free access to the Morning Reports section of the app.
Other parts of the app are available at a premium subscription rate, but the Morning Reports Lists are yours free.
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