Two Ways to Play: Deutsche Thinks US Refiners Look Slick
Strengthen your portfolio in good times and bad.
Deutsche Bank upgraded the US refining sector this morning from Underweight to Neutral.
According to Briefing.com, the bank sees a number of positive factors for 2010, such as improving demand and strong industry discipline (companies shutting down refineries and keeping utilization low, thus working off excess inventory).
Further, should the global economy continue to improve, the firm believes OPEC will be forced to increase production, which will widen the heavy-light spread and improve profit margins for the refining sector.
Companies Deutsche specifically mentioned include Tesoro (TSO), Delek US Holdings (DK), Frontier Oil (FTO), Sunoco (SUN), and Valero (VLO). For more themes for the new year, see Minyan Richard Suttmeier's Top Ten Predictions for 2010.
From the Bull Pen: Taking a look at the daily chart, Sunoco appears to offer a positive risk/reward setup. The stock is trading right at its 200-DMA ($27), which could be in the rearview mirror pretty soon. One can set a sell stop 2% below entry.
From the Bear Cave: High energy prices make a tougher environment for the airline industry on top of the weather and security problems already out there. Keep an eye on the airline ETF (FAA). Failure at $31 could mean confirmation of a bearish head and shoulders formation.
For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.
A Quick Check Around the World
Asian trading closed with the Nikkei 1.03, India 0.54%, Hang Seng -0.23, Shanghai (Closed), and Taiwan 0.24%.
Across the pond, we see the FTSE 0.65%, CAC 1.09%, and DAX 0.74%
As of 8:25 AM EST, S&P Futures are trading +6.25 to 1116.75. Nasdaq futures are +17.75 to 1876.50
A Look at Commodities
Over in commodities, crude oil is +1.54 to 80.89 while gold is +21.90 to 1118.10 this morning. Silver is +0.385 to 17.225 and copper +0.068 to 3.4155.
The dollar Index is -0.4350 to 77.8650.
On the Radar
10:00 Construction Spending -0.5% cons.
10:00 ISM Index 54.0 cons.
Click here for the full trading radar.
Good luck today!
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