🚨 I’ll be live at 2:30 p.m. ET with Alex Reid🚨
We’ll cover the WTI-Brent price inversion, rising tensions in the Strait of Hormuz, the risks of holding long positions into a 3-day weekend and more [tap to join us for Profit Panel]
You ever have a trade that should work but doesn’t?
That’s what happened to me recently with Oil & Gas Exploration & Production (XOP). The energy sector was showing strength, and I was using XOP as a clean way to play it. But instead of moving higher with the rest of the sector, it kept getting pulled lower.
At first, it didn’t make sense. The broader energy names were holding up. So what was dragging it down?
I dug into the holdings to find the answer.
The Problem Hiding Inside XOP
It turns out the top holding in XOP was Texas Pacific Land (TPL), and it sold off hard right when XOP started underperforming.
Compared to other energy companies, it was generating less revenue and lagging operationally. When that weakness hit the market, TPL dropped sharply — and because of its weight in the ETF, it pulled XOP down with it.
That’s the risk: One heavily weighted position can override the strength of an entire sector.
Finding Better Energy Plays and Managing the Bigger Picture
The takeaway is simple: Even ETFs carry concentration risk. That doesn’t mean you avoid the sector — it means you get more selective.
Looking at individual names, Chevron (CVX), Phillips 66 (PSX), and ONEOK (OKE) stood out as stronger, more consistent ways to gain exposure without relying on a single fund structure.
At the same time, this market demands discipline. Elevated volatility can shake traders out of good positions or pull them into poor ones. Position sizing matters. Entry timing matters. Chasing extended moves rarely ends well.
Geopolitical risk is another factor that can’t be ignored. Headlines around global supply routes or international tensions can shift sentiment quickly, especially in energy markets. These developments can tighten supply expectations and accelerate price movement across oil and gas names.
Everything comes back to one principle: Understand what you’re trading. Whether it’s an ETF with hidden concentration risk, an individual stock, or a sector influenced by global events, knowing what’s under the hood is critical before you enter the trade.
👉 Click here to join Profit Panel at 2:30 p.m. ET on weekdays!
Geof Smith
Geof Smith Trading
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram: https://t.me/+lm8_Nq3Su104NmFh
- YouTube: https://www.youtube.com/@FinancialWars
Important Note: No one from the ProsperityPub team or Geof Smith Trading will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. I Just Flagged This Week’s Sleeper Cell Orders
I just flagged a fresh batch of Sleeper Cell orders for this week! These are instruments Wall Street has been using to get in on stocks at ridiculously cheap prices for nearly five decades.
I’ve pinpointed 12 names set to go off this week, and I want to hand them over to you today.
Get This Week’s Watchlist Right Here
Disclaimer: We develop strategies to the best of our ability, but we cannot guarantee a future return. There is always a risk of loss when trading. Past performance is not indicative of future results. According to a backtest of 64 years of data, this strategy identified winning trades 81.9% of the time on over 7,300 trades in the dataset.
