XOP Oil and Gas Stock Outlook for Wednesday, August 9
Aug 9, 2017 Trading Blog
Another down day on Tuesday for the XOP, after what looked like a promising morning. It is tough to tell if it was directly energy related or more a reflection of the overall market with the SPY making an ugly upthrust pattern before heading down for the day. I think the SPY action might be the controlling factor for today, with XOP just along for the ride. The one relationship to watch is the QQQ/XOP inverse correlation. Over the last couple months when money has come out of tech, it has gone right into energy. Well, some of it anyway.
The API numbers on Tuesday afternoon were good for oil with a 7.9 million draw, but gasoline was a disappointing build. Really difficult to translate those results into today’s 10:30 EIA number. I really have no idea which way today’s number will go, and I’m not sure the market does either. Expect some larger than normal volatility around today’s number.
Wednesday’s XOP Grid:
Tuesday High 31.23
+.5 ATR 31.20
Wednesday Pivot 30.81
Tuesday Closing VWAP 30.77
Tuesday Close 30.71
Tuesday Low 30.48
-.5 ATR 30.34
Wednesday Trading Plan: The SPY acts like it wants to open gap down this morning, so XOP may follow. The first line of support comes in at Tuesday’s low of 30.48, which is really close to last week’s low of 30.41. If price can’t hold that area, I expect we will get a run toward the lows, as I’ve expected over the last couple weeks.
I doubt I’ll be making any trades in the first hour before the EIA number. Today may be one of those days where you just stand back and watch the action and try to get a feel for the action around the lows, if that happens. If we do get down toward the lows, my plan is to scale in slowly starting with any waterfall movement with stops getting hit in the 29.85 range. If we do somehow get the unexpected upward movement against the SPY, then I guess I’ll just sit on my hands today rather than chasing long here. One of those days where the trading plan is very fluid and not very well defined, it happens.