Oil and Gas Stocks Outlook for Friday, August 25
Aug 25, 2017 Trading Blog
I think we may have finally hit peak summer boredom. 7 million shares traded on the XOP Thursday, the average over the last three weeks is 15 million. Thursday’s range was 40 cents, the average over the last three weeks is 76 cents. Low volume, low range, and I don’t see it suddenly picking up on a Friday, especially with a big storm approaching.
Outlook for Friday: Thursday was an inside day, which simply means that the high/low of the day was inside the high/low from Wednesday. An inside day is a sign of consolidation and/or indecision. I think we probably get more of the same today. I expect that we might get a gap up or at least a run at the top of the range at 29.90 before settling back down to trade about breakeven for the day.
Trading Plan for Friday: The only decent trade I see today is a gap open or a test of the 29.90 level and a rejection of that level for a move back down into the range. Best case would be a test of the top of the range and then a move down to the bottom of the range near yesterday’s lows of 29.44, but I really don’t see it breaking any lower than that. I will be looking for a low volume move up near the open and trying to locate a safe place to get short against 30. The entry is going to have to be a very tight one somewhere between 29.90 and 30.00, because I really don’t think there is more than 50 cents reward available today. Unfortunately, I really don’t think today is going to be worth trading at all, there just isn’t enough reward available to be worth the risk. I expect low volume, tight range as everyone watches for the storm and simply takes an early end of summer weekend. But sometimes you never know and surprises can occur when you least expect them, so be cautious.
Individual Stocks: The best performing stock Thursday out of my top 20 was RRC. It has had a nice bounce and was the only stock in the list with above average volume. Natural gas stocks were mostly green yesterday including COG, EQT, AR and SWN. On the downside, HES was the weakest performer on my list, with PXD coming in a close second. I think HES could be a nice candidate for a bounce play soon. I really should have taken the MPC play that I mentioned on Tuesday, it is back above 51, helped much by the approaching storm and rising gas prices/declining oil prices. On the smallcap list, ECR is still climbing further out of my buying range, I’ve missed the boat on that one.
I’ve got another interesting stock on the smallcap list, ESTE. The stock seems to trade very technically, however the volume is still pretty low. I don’t know too much about the actual company yet, but I’m going to try out my new fundamental skills and give it a look this weekend. I have been learning a great deal digging deeper into the fundamentals of these stocks that I primarily trade technically, and the information has been fascinating. I think the effort of learning more about the industry is helping my trading.