Pete Najarian on Oil: “Don’t call a top just yet…”

Pete Najarian came out this week to school anyone who’s trying to oversimplify the surge in oil prices to be just related to the Ukraine and Russia conflict.

Sure, that’s part of it. But this move — spurred by inflation and economic policy, has been building for a long time. 

Check out Pete’s take in the clip below, and read on to find out why trying to call a top or a bottom in a volatile market like this could be a waste of time.

Trying to “call the top” or “call the bottom” is not a feasible strategy

Pete Najarian has never been one to jump the gun and try to call market tops or bottoms. He put that on display last week, on CNBC’s Halftime Report. When asked by host Scott Wapner if it was time to call a market bottom, every analyst had a similar answer… 

…except for Pete. 

One panelist gave an emphatic “yes”. Another panelist said the bottom is in when the S&P hits $4,100. Another said the bottom is in after the Fed’s next meeting.

And then there was Pete, who in no uncertain terms said “No one can call a market bottom”. Instead, he encouraged viewers to take advantage of the incredible trading opportunities unfolding right in front of them. 

Chart courtesy of TradingView

Pete’s call proved to be accurate, as the S&P is currently down 150 points since that day, lower by about 3.5%.

There’s a reason why they call it trying to “catch the falling knife”: People who tried to ‘buy the dip’ got hurt. People who stayed on the sidelines didn’t make any money. But people who traded the volatility had an opportunity to make off like bandits.

Learn from the past: Don’t try to call a top in oil

This week, Pete is back with a similar call on the commodity that’s on everybody’s mind right now… That call: Be careful about trying to “call the top” in oil.

Pete and Jon have both been very bullish on the entire energy sector, especially oil, for several months. They’ve frequently called out unusual options activity on names like $XOM (Exxon), $CVX (Chevron), $XLE (SPDR Energy Fund) and many other names. But there are more reasons to be bullish on the sector than just “smart money” purchases.

Pete details those reasons in this week’s clip, noting, 

“So many people have misinterpreted the run in oil to be just related to . But it started long before ”

Pete traced the price of oil (currently $110 a barrel at the time of writing) back to the origins of its run: the election of President Joe Biden. At that time oil was trading near $38. Though it had some dips and pauses, the price of oil has been in a steady uptrend since November of 2020. 

Chart courtesy of TradingView

Meaning that while the recent run in oil from $90 to $110 has certainly been spurred on by our new found independence from Russian energy, the broader trend has been building for over a year. 

The bottom line 

As a commodity, oil isn’t going anywhere. And it can offer traders the opportunity to capitalize on momentum. It all comes down to trading what the market is giving you and staying disciplined. Take gains when the opportunity presents itself. And never, ever try to call a top or a bottom in a market like this.

Catch the rest of what Pete had to say, along with an hour of rapidfire chart analysis in this week’s free webinar.