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Trading Plan for Tuesday, May 12

What a strange Monday. I was looking for energy stocks to test the recent highs, but they just didn’t show any life at all. The SPY was also concerning and could be trying to form a double top in the 294-295 area. Financials were also weak Monday and they are sending a signal that a market pullback could be coming. I’m cautious of a Tuesday turn here at these highs.


Trading Plan for Tuesday – I’m expecting a green morning from the SPY, but I’m cautious on a turn after lunch. If the SPY starts the day on Tuesday like it did on Monday, then I’ll probably pass on most of the trades listed below. The trades below need a flat to slightly positive SPY on the open.


I was looking for an XLE test of 39.09 Monday, yet we topped out at 38.63 on the opening bar. XLE closed 38.10. I had a long trade planned for 38.20, and took it, but it got stopped out at 38. The points to watch Tuesday on XLE are 37.74 and 37.00 on the downside and the 38.63-38.92 area on the upside. My initial plan for Tuesday is a long attempt off of 37.74. The ideal setup would be a gap down open below 37.74 and an entry on the 37.75 reclaim. If things look strong, I’d add to the position when it reclaims Monday’s 37.92 low. Put the stop at 37.65.


XOM consolidated sideways and is still just inside the larger consolidation pennant being formed over the last 9 days. It opened Monday within a couple cents of Friday’s highs, but couldn’t take them out and closed the day at 45.73. I’m watching the 45.50 area for a long attempt if the SPY is strong. If SPY is weak, then I’ll probably let that trade go. There should be good support for XOM in the 45.50-45 area.


CVX was weak all day. I had a trade planned for a long at 95, but CVX opened at 94.21 and never showed enough strength to attempt the long trade. I’m watching the 92.50-92.75 area Tuesday.  The uptrend could be in danger if price breaks 92, but I’m not interested in shorting CVX.


COP is probably going to be my big trade for Tuesday. It continues to consolidate right at the highs and is now close enough to the 41.75 stop area to size the trade up large. It has spent the last three days consolidating between 41.75 and 43.25. The ideal trade would be a gap down open below 41.75 and a reclaim entry at Monday’s 42.08 low. Put the stop just below Tuesday’s early low prior to the reclaim.


I also still like the two trades on the refiners that I posted Sunday. I’m actually leaning more toward MPC for Tuesday. I’ll be looking for an entry in the 32-32.50 area with a stop around 31.75. I’ll probably give it 75 cents worth of room to work since this one can run a good ways if it gets going to the upside.


I’ve also still got JPM on the radar. I want to try this one again, but I really need to see some SPY and XLF strength premarket to attempt it. If SPY or XLF are red, then I’ll probably pass it up. I’ll be looking to get in 89.50-90 and put the stop a bit below Monday’s lows.


The last planned trade for Tuesday day is a scale in long on MGM. I’ve divided my money on this one in four parts and I’m going to start the first scale in at 14.50. I’ll likely put a quarter in every 75 cents down to 12.25.


Good luck tomorrow and be cautious if the market shows the possibility of a reversal after lunch.

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