Middle East tensions choking oil supply — energy stocks could surge to multi-yea
Thesis
A massive portion of the world's oil has to pass through the Strait of Hormuz, which is currently facing major disruptions due to ongoing geopolitical conflicts. Traders now believe these delays and supply fears will last until the end of the year. If the price of oil pushes toward $150 a barrel as experts predict, the stock prices of oil drilling and production companies are likely to soar alongside it, as they make significantly more profit per barrel.
Strategy approach
Build a trend-following strategy for crude oil and related energy equities on the Daily timeframe. Enter long on USO, XLE, or CVX when the price closes above the upper Bollinger Band (20, 2) and the ADX(14) is above 25. Exit when the price closes below the 20-day simple moving average. Cap holding period at 30 days.