Oil and Gas Stocks Outlook for Wednesday, August 30
Aug 30, 2017 Trading Blog
Tuesday went according to plan, just a ranging market which stayed mostly in the 29.20-29.55 value area created on Monday. It did drop out the bottom near 29.00, but recovered easily. There was some selling volume until about 11:20, but when that stopped, price drifted up on very light volume for the next three hours right to the top of the range at 29.55. It seemed to run into resistance there, much the same as Monday.
About 10:30 we had a price spike of 20 cents on about 300k shares. That hardly ever happens in XOP on a normal day. It usually takes much more volume than that to move price that far. The market is very thin right now and any larger than normal order is going to move the market a lot.
Outlook for Wednesday: The first hour should continue to range between 29.60 and 29.20, but once that EIA number hits at 10:30, I really have no idea where this is going. My first thought is that the number might be a bit disappointing and we drop again to the bottom of the range, but once people justify the number due to hurricane facts, price will again move back up to the top of the range. If somehow the number is really good, this market could get a nice pop to the upside. There just aren’t any sellers around to stop it from going up. Any big move to the upside might draw some sellers though, so jumping on long and being late isn’t a good idea.
Trading Plan for Wednesday: Much like yesterday, I have ZERO desire to short this market. Any short position will get quickly wiped out on any decent buy orders. There are just no sellers to justify a short position. I will probably play much like yesterday and wait for price to drop to the bottom of the range and then play long again. It has worked for the last two days, and I don’t see any reason why it can’t work again today. If the market rips up on a good EIA number, then I am probably done for the day, as I’m not chasing this market, it is just too thin and will reverse on you too quickly. In a thin market like this, I will only play an overreaction to the downside long, not an overreaction to the upside long. Just better odds and I’m willing to just miss the move if it rips, as I’m already holding longs from Monday’s dip. If we get a big move up toward 29.90, I will probably be trimming those positions and taking profits.