Over the weekend, the U.S. and Israel launched strikes on Iran.
War is ugly. And I hope this one ends quickly.
But as traders, we can’t ignore the obvious volatility created by global conflict. Especially in oil-rich areas of the world…
The first bombs dropped on Saturday.
By Monday morning, March 2:
- Brent crude was up 6%, to $77 a barrel.
- Diesel futures spiked 13%.
- European natural gas surged 37%.
The Strait of Hormuz in the Middle East, a major chokepoint for 20% of global oil consumption, is effectively shut down right now.
This is the biggest energy-market catalyst we’ve seen in years.
And every time this happens, the pattern is the same.
When Russia invaded Ukraine in February 2022, oil surged past $130 a barrel, while energy stocks (like HUSA) went parabolic.
Just last June, oil prices rose before the U.S.’s first strikes on Iran’s nuclear sites.
Every time conflict hits an oil-rich region, the sector trades higher.
Global oil supply is at risk. That makes every barrel more valuable.
And we’re only a few days into a widening war.
Saudi Arabia is shooting down drones that appear to target oil refineries, and QatarEnergy halted LNG production after an Iranian strike on its facility.
This global volatility is shifting entire sectors of the market. Your account is at risk if you trade the wrong narrative.
My Oil & Gas Watchlist
I don’t have long-term positions in any of these stocks.
I’m not an investor. I’m a trader.
I’m trying to take short-term gains from catalyst-driven volatility. Like the momentum we’re seeing from the war in Iran.
I’m looking for oil stocks with a float below 10 million shares (low float stocks spike higher) that are spiking right now.
And as of Monday, March 2, the first day of trading after the strikes in Iran, these are the stocks that match my criteria:
- TMD Energy Limited (AMEX: TMDE)
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- The float is only 3.5 million shares. The price spiked 411% in premarket on Monday, March 2, and bounced off $2 support intraday.
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- Battalion Oil Corp. (AMEX: BATL)
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- I traded this stock. My analysis is further in this blog…
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- Trio Petroleum Corp. (AMEX: TPET)
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- The float is only 9.6 million shares. The price spiked 220% on Monday. Prices consolidated around $1 into the close.
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- Indonesia Energy Corporation Limited (AMEX: INDO)
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- The float is only 9 million shares. Prices spiked 67% in premarket on Monday. The price retraced to the prespike level at $6 where it’s finding some support.
My Trade Process
When I checked the market on Monday morning, BATL was one of the stocks that matched my criteria.
It had a float of 6.2 million shares, it’s in the oil sector, and the price spiked 128%* when the market opened on Monday.
I pulled a 10% profit from the move.*
Why did I trade BATL over the other stocks?
The chart followed one of my favorite patterns. It was a classic breakout setup.
The price spiked at the beginning of premarket and set a top (the breakout level).
Then it consolidated sideways, bouncing off of support at $9, until it surged toward the breakout level around 7 A.M. Eastern.
You can see my position on the chart below:
The price is still up. That points to more strength ahead.
We’re only a few days into this conflict. And these catalysts don’t resolve overnight.
The Gulf War lasted for months. Defense stocks ran the whole time.
There’s more volatility coming.
Study these patterns, watch the charts, and prepare for low-float oil stocks to spike following the next headline.
Cheers
*Past performance does not indicate future results
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