VLO is overextended after a 77% rally; facing windfall tax risks and cyclical crack spread compression, it is expected to decline significantly in the near term.

Valero, MPC, uh, Philips 999, which is PSX. But this is a this is an outlier. I just heard about this today is that in Europe, they're talking about instituting a windfall tax on the refiners because they're making so much money.

That could signal a change in narrative in those stocks where you could start to see those stocks starting to fall as speculators run for cover. If it was if it was passed if it was announced and passed a windfall tax even just out of Europe, these stocks would probably drop 15 to 20% as again it would wipe out a lot of the profits that they are making.

We talked about Valero. Valero trading basically flat in the pre-market. Again, look at the rise just going back to June. This stock has rallied a whopping, let's see here, 77% in just a few months.

And again, you looked, if if you showed me this chart, I'd be like, "Oh, that's got to be like the latest hottest AI stock, right? I mean, they must have technology that's going to cure cancer.

No, actually, they probably have stuff that's causing cancer. But that's besides the point. The point is is that this stock has gotten way ahead of its skis, especially now that the political atmosphere is starting to look at who's making so much money off of high gas prices and diesel prices, and the politicians will start attacking these players and talking about that windfall tax.

And then also remember historically we've seen crack spreads get big and wide with them making lots of money and then it shrinks back down. And so inevitably these stocks have boom and bust cycles much like cyclical players and they will have it as well.

So I continue to like it. I am short Valero myself and I do think these will come in heavily over the coming weeks and months.