No matter what happens on November 3, energy stocks are set to move higher.

That’s a contrarian view, for sure. Almost nobody likes “big oil” right now.

The popular thought is that a Biden victory is bad for the energy sector. But a Trump re-election would be good.

And, the stock market is currently discounting a Biden victory. That’s why oil and gas stocks have been drifting lower nearly every single day. It’s also why renewable energy stocks – anything in the solar energy sector – have been rocketing higher.

At this point, though, conditions have gotten a little stretched. The Invesco Solar Fund (TAN) is up about 130% from where it started the year. Meanwhile, the Energy Select Sector Fund (XLE) is down about 50% for 2020.

Keep in mind, though, the stock market discounts expectations. In other words, investors act on whatever they believe will be the expected outcome before an event actually happens.

Investors are adjusting their portfolios by dumping oil and gas stocks (and apparently, buying solar energy stocks) right now in anticipation of a Biden victory.

By the time the election rolls around, anyone who was inclined to sell oil and gas stocks would have already done so. There won’t be any sellers left.

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Even if Mr. Biden wins the presidency, oil and gas stocks are likely to bounce – just because there won’t be anyone left to sell – and the realization that it’ll be years before we see any meaningful change in energy policy begins to settle in.

And, if Mr. Trump returns to office… well… we could see a mind-blowing rally in the energy sector.

So, no matter what happens on November 3… it’s heads we rally, and tails we rally. And, the market should soon start discounting that event.

Traders should take advantage by buying some exposure to the energy sector prior to Election Day.

Best regards and good trading,

Jeff Clark

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Reader Mailbag

In today’s mailbag, Delta Report subscriber Gary shares why he disagrees with Jeff’s analysis in Monday’s essay…

Regarding the Invesco Agriculture Fund (DBA), I can’t agree with your analysis on the chart. Because if what you’re referring to was true, that bacon would have been $15 a pound back in January. But I agree food costs are rising beyond reason, just like everything else.

I’m retired, but minimum wage increases are going to drive a lot of costs up that my social security certainly won’t keep pace with! Next thing you know, we seniors will be holding up a McDonald’s drive-thru!

– Gary

Thank you, as always, for your thoughtful comments. We look forward to reading them every day. Keep them coming – and send us any questions – at [email protected].