Energy Back as Leader of the Pack

The indices may be down, but energy stocks have been recharged and are posting solid gains on the day.

Back in early March, I shot a video talking about how commodities were ready to combust, as speculation was getting overheated, and that if the market remained under pressure, you'd see investors, or more notably, hedge funds, forced to take profits in the agriculture, metals, energy and infrastructure names to offset the losses being incurred in financials, retail and most of the broader market. It took two weeks, but that correction finally occurred last week.

Which caused me to quickly change my tune last week, when I wrote that last week's wipeout in commodity prices and the stabilization of the stocks and the dollar would make it time to get back into the group, as the above-mentioned money managers will want to have those names, which still have good the year-to-date performance, on their books heading into the end-of-quarter mark-up period.

That's my long winded way of saying that the big winners today that are also seeing above-average call buying include the Oil Services HOLDRs (OIH - commentary - Cramer's Take) and some individual issues, such as Anadarko Petroleum (APC - commentary - Cramer's Take), which is up 3% and seeing option volume run nearly double its daily average.

Some coal stocks such as Peabody Energy and (BTU - commentary - Cramer's Take) Arch Coal (ACI - commentary - Cramer's Take) are doing even better with each up over 5% and seeing four calls trade for every put and overall option volume nearly three times the daily average.

Some coal stocks, such as Peabody Energy (BTU - commentary - Cramer's Take) and Arch Coal (ACI - commentary - Cramer's Take) are doing even better, with each up over 5% and seeing four calls trade for every put, and overall option volume nearly three times the daily average.

ALL STEVEN SMITH BLOG ENTRIES | POST A COMMENT | READ COMMENTS  

---

Steven Smith writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He was a seatholding member of the Chicago Board of Trade (CBOT) and the Chicago Board Options Exchange (CBOE) from May 1989 to August 1995. During that six-year period, he traded multiple markets for his own personal account and acted as an executing broker for third-party accounts. He appreciates your feedback; click here to send him an email.

To read more of Steve Smith's options ideas take a free trial to TheStreet.com Options Alerts.