No Reason to Reflect: Energy is Next

“Where you want to be is always in control, never wishing, always trading, and always, first and foremost protecting your ass.” PTJ

Let's focus on what is true. I know this industry is full of people who push bad products on good people just to make a quick buck. That is not what I do here.

I talk about how to make money.

Success in trading comes down to probabilities. Forget about elections, religion, or time machines; they have no place here. What matters is price action, backtesting, position sizing, and building personal resilience.

That's the real formula for making money. This is the truth.

As for the current market, there are some high-probability setups as the market approaches the election. But above all else—sorry to repeat myself—it’s energy.

The XLE is positioned for a significant move right now. I usually don't include this in our Friday reports, but the timing is perfect. I want everyone to come into Monday prepared and ready to buy.

We’re looking at buying call options on XLE. As you can see volatility has compressed.

The trend has been stagnant for over a year and this leads to large moves!

Most people have written it off, but oil, heating oil, and gasoline have all made significant rebounds from support levels.

All three charts show similar patterns, each bouncing over 10% off their respective support.

These are weekly charts, and I’m not trying to curve-fit or force a case for this trade. Oil is sitting on support, bouncing, and while the trend isn't attractive, there’s a solid opportunity here. So, why buy options on XLE?

First, it’s an asymmetric way to take risk on this trade, and that’s why I use options. When they're cheap and premiums are decaying because no one likes the trade, that’s when it gets interesting—just like the recent trade on CCJ. (I highlighted three options trades in that report.)

Our recommendation: buy the 100 strike calls on XLE at 2.20 or better, with a January 17th expiration. For those who prefer individual stocks, XOM calls at the 130 strike for 4.40 or better are worth considering. Personally, I’m targeting a longer-term move, so I’ll be buying the 100 strike calls in the March monthlies.

Here’s why this trade makes sense:

Commodities are finally starting to show strength relative to several asset classes, one of which is bonds. Bonds have underperformed commodities for the last four years, and now the market is seeing a shift.

Additionally, the largest stock in the XLE—XOM, which makes up over 22% of the ETF—historically shows strong seasonality as we move toward the year’s end.

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No matter how you look at it, we take high-probability bets and execute trades based on those convictions. The key is to size every trade as if you might be wrong—this is how you make money consistently.

Once again this is the truth!

I believe this is why so many traders fail. In most fields, whether it's business, sports, or management, you're told to take big risks and make bold moves to succeed. It's all about setting big, audacious goals, having vision, and believing in yourself.

But trading is different. The way compounding works changes the game entirely. As. you can see below.

You have to think about the downside constantly.

If you protect the downside you can easily make money. So don’t go all in on this trade. Go all in on your portfolio. Your strategy and your methodology.

Against All Odds Research

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