Trade Alert: LNG And Optical Networking
These combinations aren't as random as they may seem.
The Logic Behind These Odd-Sounding Pairings
The title of today’s trade alert may remind you of one from a couple of weeks ago,
And you may be wondering why these strange-seeming pairs of stocks. Let me explain.
At the end of every day the stock market is open, Portfolio Armor estimates potential returns over the next six months for every stock and exchange traded product with options traded on it in the U.S., and ranks them accordingly. The Top Names from that ranking tend to significantly outperform the market over the next six months, so those are the names I start with when looking for trade ideas. I run them through a couple of additional screens—RSI (Relative Strength Index) and Chartmill’s Setup rating—to weed out names that look like they may be over extended to the upside, breaking down to the downside.
The next step is bit more subjective: I consider the relevant macro trends, and how they might affect each name.
Four Stocks, Two Macro Trends
Four of Tuesday night’s top ten names passed our additional two screens: one optical networking company, one U.S.-based Liquid Natural Gas infrastructure company, and two chemical companies. The two macro trends represented here are the shutdown of the Strait of Hormuz, constraining the supply of petroleum products and the AI buildout, and the two more obvious beneficiaries of those were, respectively, the LNG company and the optical networking company. So those are our two trades today.
Full details below.
Today’s First Top Names Trade
AI optics / data-center interconnect theme
