Oil and Gas Stock Outlook for Thursday, August 10
Aug 10, 2017 Trading Blog
Wednesday was almost an exact copy of Tuesday’s action with a very strong start and high made early, then a fall that lasted all afternoon. While Tuesday’s cause was likely a fall in the SPY, Wednesday’s cause seemed to be related to the EIA number that came out at 10:30. I actually thought the number was quite solid, but I guess there was some fear surrounding the gasoline build. The gasoline imports were high and the refinery runs were record level. Demand was also very high. Maybe the thinking is that since we are at these high levels, that there is only one way things can go from here – down.
I actually thought Wednesday’s action had some buying pressure underneath, other than the 45 minutes or so after the report came out. There were very short 10 cent bursts of buying all afternoon. It is difficult to tell if this was active buyers or simply lack of active selling pressure. The sellers seemed more in the mood to just let the buyers come to them, the problem was there just weren’t enough buyers to do any real damage to the overhanging supply.
At this point, I think what we may be looking at is another run toward the top of the range, which would simply indicate a continuation of the accumulation range. If this market were in fact ready to run up, what we probably would have seen by now would have been a run to the lows to take that liquidity. We have had every opportunity for that to happen, and it hasn’t. So the probability shifts to an up move toward 33 and a test of the boundary there. Pay specific attention to the volume on any run up. If the volume is light, it is likely just a test of the top of the range and the probability of a bull trap is high. If the volume is very high, it might be worth a play for a breakout.
Thursday’s Trading Plan: Given yesterday’s short bursts of buying and low selling pressure, I’m looking for a high odds spot to get long today for a run up toward 31.25 and possibly a break of that area, using the 30.50 area as a stop on the trade. SPY looks like it might want to gap down again, so we might get a dip in everything in the first 30 minutes. If there is any high volume selling in XOP in the first 30 minutes, I will abandon the long play and turn back toward the longer term view of price making a move back toward that 29.90 low. Everything will depend on volume today.
Thursday’s XOP Grid:
+.5 ATR: 31.24
Wednesday High: 31.16
Thursday Pivot: 30.86
Wednesday Closing VWAP: 30.82
Wednesday Close: 30.81
Wednesday Low: 30.60
-.5 ATR: 30.38