JPMorgan's Kolanovic issues a tactical trade to sell energy stocks

December 9, 2022 6:01 AM EST
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Marko Kolanovic, JPMorgan’s top strategist, is telling the firm’s clients to sell energy stocks in the near term. Kolanovic, who has been Overweight Energy for months, is now seeing a tactical trade opportunity in energy stocks given “an enormous gap” between this group of stocks and the price of energy commodities.

“With oil being close to flat for the year, and the energy segment up ~60% (large cap and services, 40% small caps), we believe that there is a tactical trade to sell energy stocks (either outright or relative to Oil). The catalyst for convergence would be a pullback in the broad equity market,” Kolanovic wrote to clients in a note.

The strategist highlighted the short-term nature of his call as he remains a firm believer in the “energy supercycle and broad market recovery after a Fed pivot.”

Along these lines, he added that a “significant pullback (20-30%)” in the energy sector would facilitate a great entry point for long-term investors.

By Senad Karaahmetovic

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