Anatomy of Bullish Trades in Oil & Energy
This post is an excerpt from our July 3rd report to VP clients (link to original report), showcasing VP’s tactical bullish signals in the Oil market and the Energy sector. The tactical tools used are part of VP’s tactical trading framework: blending better data and better data science.
Oil's Bullish Opportunity: The Signals Aligned
Tactically, a bullish oil trading window was revealed in early July, substantiated by VP’s Fast Money metrics falling into distinctly contrarian bullish levels.
Snapshot of model on July 3rd:
The bullish setup was reinforced with the trigger of VP Reversal Buy signals on WTI and Brent, adding further conviction.
Snapshot of the Oil market on August 31st. A rally of over 20% since the report was published:
Energy Sector Dynamics: Signals and Flow
The bullish read-across from our tactical tools to energy equities was also clear, further corroborated by specific energy equity indicators: the VP Reversal Buy signal and VP’s cumulative flow proxy.
Snapshot of model on July 3rd:
Snapshot of model on July 3rd:
Energy’s cumulative flows had reverted to levels where, since the beginning of 2022, was where rebounds began. These data points reinforced our bullish tactical view on the energy sector.
Snapshot of XLE on August 31st. A rally of over 10% since the report was published:
In the case of the energy sector, we also had further conviction as our capital cycle and crowding models continue to show the sector as capital-scarce and uncrowded.
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