Hurricane Stocks - Part 2 (Puts)

Likely areas affected by Hurricane Gustav are Louisiana, Texas and New Orleans, Miss., Alabama, Florida

Tracing back to Hurricane Katrina the sectors badly affected are
Oil, Gambling and Entertainment, Agriculture and Forestry and Utilities.

Usually, it is harder to go short on any stocks...thinking that things might work your way. Most of these stocks have been massively oversold and developed a strong support.

But I found a potential short opportunity that is worth looking at.

We have seen the Rails sector rallying a bit for the past 8 days, so there might be some relief selling coming soon.

Check out UNP, it is still in bullish phase. The tip has touched the trend line and retreated a bit signaling a possible pullback to about 76.53 - 80.

If you notice, it could be forming into a rising wedge..which is a bearish sign.
But do be prepared with your stop losses in case it plans to continue the journey higher.

Hurricane Stocks - Part 1 (Call)

All right, lets get straight to business right away!

Hurricane Guztav is now rated a Cat 4 and might be upgraded to Cat 5 in a few days!

How do we react?
Looking back at SPY during Hurricane Katrina in 2005 from August 23 to 30, we can see that there is a nice rally lead by the Energy sector.





A mild pull back in Energy stocks is presenting us with a nice opportunity to go "Long" for at least 7 - 14 days.

Here is my pick:
SLB - An Oil service company that specializes in technology and consulting.

Would be good if it retraces a bit to 91.63 for a better entry point. But if it rallies, I recommend putting a small position for a start.




I expect this stock to hit 100 - 110 by October.

Be advised to take half your profits off by Friday, you will never know what happens on Monday (8th Sept). You can leave half your positions running until October in anticipation of the earnings call.

So good luck on Tuesday! :)