Oil and Gas Stocks Outlook for Thursday, August 24
Aug 24, 2017 Trading Blog
First advice for today: Once your body gets a little older, crunching ice cubes with you teeth is no longer a recommended activity. You will end up in a dentist chair listening to the evil grinding sound of a drill and smelling the burnt odor of teeth dust, all the while missing the EIA number. Not cool. Not cool at all.
Second advice: Don’t become so married to an opinion that you willfully disregard evidence which is directly contrary to that opinion. I’ve made both mistakes over the last couple days (although honestly, I’d really like to have that ice cube decision over again).
On Tuesday, I wrote about it being an absolutely bizarre day that didn’t fit at all with the past couple weeks downtrend. Well, I should have seen that as a red flag, but instead I just brushed it off because I thought I was right and the market was just wrong that day. It doesn’t work that way. The market is always right, and opinions are usually wrong. I should have seen Tuesday as a possible trend change day. Wednesday followed through on that trend change. Now today we will see if that red flag was real or just a short term anomaly.
Outlook for Thursday: After seeing the action from Tuesday and Wednesday, my first thought is that this is just a low volume reaction retracing back to the point of breakdown at 29.90, which should fade back down to new lows again. We seem to be in a range of 28.96 to 29.90. If the market was a football field with short in one endzone and long in the other, I’ve probably been on the 20 yard line on the short end of the field in opinion. After the last two days, the wise move would be to move my opinion toward neutral midfield, say around the 30-35 yard line on the short end of the field.
Trading Plan for Thursday: I am expecting another run at that 29.90 level and will be looking for a safe place to try a short, but with a very tight stop. Playing short down this far is very difficult because the momentum often is wider than what I like to use as a stop. But in this case, if I’m right and the 29.90 level gets rejected, there could easily be a dollar to the downside. Not a bad reward for 20-25 cents of risk. On the other hand, if we start down first this morning, I’ll probably just watch and wait to see where the first buyers show up and then watch that area for a possible long. Long is not my first option today, but if it is offered I will take it.
Good luck today, and remember, be flexible in your opinions, and do not crunch ice cubes with your teeth.