02Sep11:56 amEST

All Hail the Shale

oil shale
/ˈoil ˌSHāl/

fine-grained sedimentary rock from which oil can be extracted

Oil is popping today to dovetail the impressive breakout in natural gas over the last week or two. While we expect strength in natty to usual go under-the-radar and to not be embraced by speculators given the duration and scope of the long-term natty bear market over the last decade-plus, we are seeing more signs pointing to the fallout from Hurricane Ida perhaps igniting another rally in the energy patch. To wit, the strength in coal and uranium of late is not likely to happen if energy stocks at-large were headed for a new leg down. 

And with big-time names like Chevron (CVX) having corrected all summer only to put in a higher low by price this week, I am willing to take a stab that the group is ripe to move higher. 

As a result, I went long CPE, below on its daily chart. Callon is an independent oil and natural gas company with Permian Basin and Eagle Ford Shale exposure. The stock is heavily-shorted, and at a $1.6 billion market cap and the stock having strongly reclaimed its 200-day moving averse (yellow line), I would not feel comfortable holding this high beta name short at the moment. 

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