Chesapeake Energy Corporation (NYSE:CHK)
Chesapeake Energy Corporation has been a very interesting stock to watch. While the stock has struggled for some time now, some seem to think that we're reaching the bottom and that it will pop back up. This is creating a ton of volatility. Now, let's get one thing straight, I will not say that CHK is a strong investment opportunity. In fact, I believe the exact opposite. However, there are some opportunities that are going to be incredibly profitable for the day trader. Today, we'll talk about why I don't believe that the stock is a strong investment opportunity as well as why it presents strong day-trading opportunities.
CHK As A Long Term Investment... Bad Move!
First and foremost, lets address the idea of Chesapeake Energy as a long-term investment. At the moment, this just doesn't seem like a good idea. The reason for this is simple, it lies in the company's product. The company is focused on the exploration, drilling, and sales of oil. As a result, it is highly susceptible to movements in the value of oil. When the value of oil goes down, the profits the company makes from its flagship product decline.
Now, take a look at the oil market. Unfortunately, conditions are far from positive. For more than a year now, we've been dealing with a supply glut that has had the commodity trading at incredibly low levels. While there is hope that oil will start to gain in value soon, it doesn't look like this is going to happen any time soon. As a result, low oil prices will likely keep CHK on a trend downward.
Will The Stock Ever Be A Good Long-Run Investment?
The truth is that no one can see into the future, and I'm not going to pretend to be able to. However, I can say that I do believe that CHK will be a good investment one day, just not any day soon. While oil continues to be surrounded by uncertainty, this one remains very risky. However, oil won't stay low forever. When a recovery does happen, there will be huge long-run gains to be made here. Nonetheless, you don't have to wait for strong opportunities. There are plenty at the moment!
This Is A Great Stock For The Day Trader
While Chesapeake Energy's long-run outlook isn't great at the moment, there are tons of opportunities surrounding the stock in the short term. These opportunities are great for day traders. The truth is that trading CHK can be much easier and much more profitable than many other stocks.
When it comes to Chesapeake Energy, the stock is highly dependent on the value of oil, which is what has caused quite a bit of volatility in the stock as of late. When the value of oil starts to drop, we see declines in the price of the stock. Adversely, when the value of oil is headed up, we're seeing gains in CHK.
As a result, a great way to play this one is to watch oil. When you get started for the day, take a look at the oil market to see if things are going up or down. If oil is falling, it's a good day to ignore CHK. However, if oil is gaining, it's likely a good time to buy. Then, sell the shares at the end of the day and take your gains as more declines are likely on the way.