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Energy Trading Plan for Wednesday, June 17

Tuesday was 30 minutes of fear and six hours of boredom. Tuesday’s trading plan was decent, but the market moved so fast premarket that I didn’t get an entry on anything. Most energy names broke out of the small bases they were forming and moved well into the gap created last Thursday. The best names were COP (+4%), EOG (+4.6%), PE (+5.6%) and OXY (+6.5%). The worst pick was COG and the other natural gas names.


As of 5:30 am Wednesday, it looks like we are headed for a flat to up open with the SPY reaching a high of  316 around 4:30am. The XLE is +.5%. The SPY likely either moves up and closes that Thursday gap to around 319 today or it fails and heads down to test Tuesday’s lows around 308.50. That presents a few trade possibilites. If SPY gets stronger over the next 3 hours before the open and makes a run at 319, I’m looking at shorting that gap close. If it moves sideways, I’ll be watching Tuesday’s highs around 315.50 for clues and a possible long breakout play to finish the gap close. If 315.50 fails, then price likely just falls back into yesterday’s range for some sideways consolidation and then a late day move down.


Important points for SPY today: 315.64 (Tuesday High), 312.70 (Tuesday VWAP), 310.36 (Last Week VWAP), 308.42 (Current Week VWAP) and 307.67 (Tuesday Low).


After a very strong run off of Monday’s gap down open, most energy stocks might take a breather today. I’m not really looking to short energy. I’d rather wait and see if we can get a pullback for a few long plays. Just like yesterday, almost all the energy patterns are similar. The core idea today is to see if the energy names fade back and test the breakout points which are around the Monday highs. That breakout point got tested in most names Tuesday morning on that 10:30 sharp dip and the held well. There could be another opportunity to play long again off the Monday highs if the SPY will cooperate and at least stay flat to green today. Also, most of the weekly VWAP’s on the energy names are sitting right on Monday’s highs. For these trades to work, the SPY should be slightly green or at worst just slightly red. If things look really weak today, then none of these trades will work.


MPC – Monday’s high was 38.20 and the weekly VWAP sits at 37.90. Look for a pullback to 38.20 for a long attempt and use an area slightly under the 37.90 to stop out. Target 40.50. Same trade for VLO around 64.50.

OXY – Long attempt if there’s a pullback to 19.50 with a stop around 19.25. Target a run back to 20.75. Same play for EOG around 52.75 and COP around 44.

SLB – Long attempt in the 19.30 area with a stop at 19, target 20.50. Same trade in HAL at the 13.25 level.

XLE – Watching the 40.75 area for an early long attempt and not going to give it much room to move against me. Will look for an entry in the 40.50-40.75 area and then use about a 25 cent stop for a possible run back to Tuesday’s highs.


If none of the energy names present opportunity, I’ll be back to scalping the IWM. There were a few good short opportunities in it Tuesday, but it was mostly a chopfest. The biggest takeaway from Tuesday was that IWM did manage to close that gap from last Thursday and it never really made any effort to revisit that area before fading the rest of the day. I’m watching for a down open to the 142 area for a possible long play. The upside on that play might be capped at the 8 day ma around 145. If that long play doesn’t develop, then it will be back to the usual short scalps as it could take out the weekly VWAP around 141.50 and then make a run back to the 134-135 lows.


There should be opportunity today. I think this market needs to make a choice today about which way it wants to go. Either the big run from the Monday open still has some steam left or it doesn’t, but I don’t see it just moving sideways today. I think we get a tradable direction, although I’m not totally sure which way that direction will be. Stay flexible.




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