Trading Plan for Friday, March 15, 2019
Mar 15, 2019 Trading Blog
Thursday ended up being a real dud. It was simply a day of indecision as the SPY put in an inside day with a very small range of just $1.17. While most will probably view it as a meaningless day, I think it probably shows more favorably for the bulls than it does for the bears. The market was setup coming into Thursday to possibly produce a rejection of the upper range, however it held it’s ground and avoided the rejection, which says something about the power of each side. If I was forced to predict, I’d say this market likely breaks out the top of the Wed/Thursday Parent candle. That doesn’t mean I would play it that way though, as the odds just don’t make a Friday long play there profitable in my opinion.
SPY – The levels for the overall market are well defined. The two topside levels are 281.84 and 282.38, while the downside levels are 280.67 and 280.30. The trade setup is to observe the first direction today and see how it reacts at the first levels, then see if it rejects and heads to the other side of the range and levels. The preferred trade for me is to let the market come down early and test the two lower levels and find a spot to get long off them for a reversal and move to the upper levels and possibly a breakout from the inside day pattern.
Oil – Oil showed overnight strength, almost touching 59. At some point, the price has to kickstart the E&P’s. Many of those guys are making decent cash at $60 oil, which is quite a difference from the low 50’s price when most of them reported earnings. Gold and gold miners are green as of 7am ET this morning and the EURO is also green. Rig count at 1pm ET.
XLE – The chart pattern here is a bit shaky as price has run for the last four days and put in a bit of a shooting star type candle on Thursday, which suggests this could reverse some of the week’s gains. The point to watch for Friday is 65.97. Price needs to establish above Thursday’s range, but at least no worse than staying within Thursday’s range. If price breaks down into Wednesday’s range, it could stick there most of the day. On the upside, watch 66.38 and 66.85/66.93. XOM and CVX both put in red days Thursday and the CVX chart pattern looks especially cautious and could be looking to retest the 119 level. Services stocks SLB and HAL also show similar patterns, with SLB showing failure right at the 50 day ma.
XOP – The E&P’s are barely clinging on to the 50 day moving average which is sitting at 30. The 20 day ma is at 30.09 and the 8 day ma is down at 29.37. My plan this week had the XOP reversing yesterday at the 30 mark, but it mostly just stalled out and consolidated rather than reversing. It will be important for the XOP to hold Thursdays range and stay above the round number at 30. If it breaks below 30 on significant volume, then I think we could possibly start the move back down for a retest of 28. I’m cautious about shorting today, as this market has been stronger than my plan. On the upside, I’m still watching the 30.35 level and I’d probably take a shot long with some size if we took that level out on good volume. More than likely, we get a sideways consolidation day Friday, which is really going to be boring.
COP was the most worrisome E&P yesterday. It has barely been hanging on to the 65 level this year and it faded badly Thursday putting in an ugly reversal candle right on the 50 day moving average. Watch this one as a leader, there is a good chance it approaches the 65 level again soon.
Individual Trade Setups:
HES – I mentioned this one earlier in the week as a short setup against the 60 level and it is still showing a good setup. It could likely be played short against Thursday’s high, with the added bonus of some protection around 60 which is where the 200 day ma sits. Be careful on this one though, if it does cross that 60 level, it could rip to 70 in no time, keep the stop tight. WLL and FANG show similar short setups against Thursday’s highs.
APA – Apache just keeps ripping higher and is the E&P with the most upside momentum to be played long after a pullback, which could be coming soon.
HAL – I’m still waiting on Halliburton to make a run down toward 25 for a long attempt. It bounced a little this week, but has been an underperformer.
NOV – Another service name I’d like to own near the Christmas Eve lows.
LLEX – Microcap name that I’m watching for a pullback towards $1 for a long attempt. Very risky name.
MGY – Still waiting for a break of the 13 level for a run at the highs above $15. Very well defined risk management on this one using the moving averages which are all compacted in a 25 cent range. Using 12 as a stop would probably net 2:1 on the trade.
RIG – It’s still hanging on to the $9 level and sitting above the 8/20/50 day moving average combo. It would probably take an $8.50 stop to play this one long for a run to 10-11 range.
Also, the above trades are not recommendations in any way. These are just my notes and a way for me to organize my thoughts as the market opens each day. I post the notes here and if they help others, then that’s cool. Just my way of giving back a little for all the great stuff that I take from others who post their trading thoughts. Good trading Karma you know.