Trading Plan for Thursday, March 21, 2019

A huge EIA draw and an incredibly dovish FED really pumped up the energy sector on Wednesday, but given the magnitude of those events, the move should have been larger. Those two forces probably should have pushed XOP out the top at 31.60, but the market gave up the gains and finished at 31.03, which is barely above Tuesday’s high. The difference in Tuesday and Wednesday should have been much greater considering the news available on Wednesday, versus what we had on Tuesday. So many people focus on just the news and they forget to observe the reaction of the market to that news. When the reaction doesn’t match the news, that’s a useful signal. Let’s see if the hesitation at the top of the range follows through into Thursday.

 

SPY – The overall market still finished the day in the red, even with the dovish FED giving the market everything it wanted. That’s not an encouraging sign. The SPY was sitting around 281.15 at the time of the announcement and finished the day at 281.53, after reaching a high of 283.50 on the announcement. This wasn’t even close to Tuesday’s high point of 284.36 and that $2 roll back from the highs probably shouldn’t have occurred and might be a signal that the market has run out of steam. In fact, the SPY barely closed inside Tuesday’s low of 281.41 by 14 cents. It’s possible that many were expecting this move from the FED and the announcement functioned as a sell the news event. The only way to know for sure is to observe the action on Thursday. Bottom line here is that the SPY should have held those gains and probably finished at a new high after that FED announcement, yet it didn’t, and that’s a red flag.

 

XOP – It’s the same story with energy, more so with XLE than with XOP. The EIA draw was huge and combined with the dovish FED (especially the Dollar reaction) the energy market should have made new highs and held those highs, but it didn’t. XLE made a new high at 67.42, but tumbled back inside Tuesday’s range. The XOP made a new high by 6 cents and barely managed to hold above Tuesday’s range. I gave the XOP a shot short at 30.97, but cut the trade at 31.01 for a small loss. The entry was too early, I should have waited for the FED announcement to filter through a little more and tried to get an entry closer to the top of the range around 31.50. The better short would probably have been the XLE because the EIA number affected the E&P’s way more than the larger cap names. Most of the small cap E&P names that make up the XOP really got a bounce on that EIA draw. I should have considered this and moved to the XLE for a short and that was my mistake.

 

The true health of the XOP will show on Thursday. If there is real strength here, this market should easily take out Wednesday’s highs of 31.43 and then close well above that level. Any failure at Wednesday’s high is a huge red flag and the warning gets more serious if the XOP can’t hold above Wednesday’s range. The further down in Wednesday’s range that the XOP closes, the larger signal of weakness that would be for me. There should be solid support down at Wednesday’s low of 30.05 with the round 30 level and the 50 day ma sitting at 30.16 and the 20 day ma at 29.99. I feel fairly certain that the XOP will hold 30, but would also be concerned if it got anywhere near that area.

 

If there truly is strength in the XOP, it shouldn’t dip much below 30.80 on Thursday morning. After a quick test there, it should easily take out the highs at 31.43 and then challenge the 31.60 level for a breakout of the Jan-March highs. I’m going to consider it a disappointment if the market doesn’t make that move today, as it has great EIA numbers and an incredibly dovish rate and dollar environment to work with. If this information can’t push the XOP out the top of the range, then I’m not sure what could, as it doesn’t get much better than this for oil and the E&P’s.

 

So given that outlook, how to trade it? I’m looking for a pullback under 31, preferably close to 30.80 to get long for a run at Wednesday’s highs. That’s my ideal trade. Most likely though, the XOP is going to open with a gap up, which makes a more difficult play. If it gaps close to the highs, I’ll probably let it break out and then hope it drifts back down and retest Wednesday’s range at the 31.43 level, where a long trade should set up. Not my preferred type of trade, but if I want to catch a breakout run toward 32, that’s going to be the safest way to do it. So, two choices basically 1) let it pullback close to Wednesday’s VWAP in the 30.85 area and get long OR 2) let it go ahead and show the breakout strength and then let it pullback to the breakout point for a long. Anything in between those two options is simply guessing and will likely chop you up if this ends up consolidating all day.

 

On the short side, I’d probably wait for a clear failure signal before getting short. If the market puts in a clear failure at Wednesday’s high of 31.43, I’d probably try a short using that point (or today’s intraday high) as my stop. Pulling back and looking at a chart from early December until current, we are clearly sitting at the top of the range and any failure is going to send us back into that range, possibly to the opposite side of that range. I’m probably leaning about 65% long and 35% short on today’s trade possibilities. It’s going to take a very clear signal to send this market down and if we don’t get it, the natural flow and inertia might keep pushing the market higher.

 

The only individual stocks I have an eye on today are XOM and CVX. They absolutely did not participate in Wednesday’s strength and CVX even somehow managed to finish in the red, down about -.5%. If these two aren’t going to run, then the XLE isn’t going anywhere. COP was also a bit of a concern finishing the day barely green at +.3%. Also, the refiners were a weakness with MPC finishing barely green at +.3%, PSX -.7%  and VLO almost unchanged. The refining portion of the sector was definitely hurting Exxon and Chevron. Keep an eye on the refining subsector today to see if it can bounce back and carry XOM and CVX with it.

On the macro level outside of energy, keep an eye on the 123 level in the TLT.  Watch the XLF to see if it bounces back today in the face of lower rates. Also, keep an eye on gold to see if money wants to keep moving to commodities. Watch the EURO to see if it can hold the 1.1335 level. If the EURO starts failing again, that could take gold and oil back down with it.

APVO – Big volume on this small biotech and another couple of 13G’s filed on Wednesday. This one is looking more interesting by the day. Long at .87 and will be looking to add on any dip below .80.

Trading Plan for Wednesday, March 20, 2019

Oil is starting to look a little shaky again, which unfortunately is coming just as the XOP was making a run back to the top of the range for a possible breakout. Tuesday’s action was very discouraging for the bulls and left a difficult chart pattern as we start Wednesday.

 

OPEC decided that they don’t need an April meeting and also gave the signal that they plan on keeping cuts in place, which mostly means that oil inventories aren’t coming down as they had hoped and that they don’t have the prices they want. I think many people thought these cuts would have cured the supply problem by now, but they haven’t. This is really concerning when you consider that there is minimal oil coming out of Venezuela, Canada still has it’s issues and more waivers are being granted to Iraq.

The USO chart still shows an uptrend, but that thing is starting to morph into a rising wedge type pattern and a breakdown could be very quick if it happens.

 

We have the FED today at 2, so I’m not looking to get very involved before that time. The market should be completely dead for most of Wednesday. I think the announcement might be a little more hawkish than many are expecting. I just can’t see a dovish FED play here as the market is screaming toward all time highs. The FED has been irresponsible at times, but getting dovish here as the market is making this kind of run is just pure disregard for the longer term health of the market and I’m really hoping they aren’t going to be that careless.

 

SPY – The ATH sits around 293, and so far the market is showing every intention of taking that level out in the next month or so. Yesterday turned into a bit of a ‘Turnaround Tuesday’ and left a negative candle on the chart, but that hasn’t seemed to stop the SPY in the last couple of months, as one day candle patterns have been fairly meaningless. The 8 and 20 day ma’s still sit at 280 and 279, so there is good support for any temporary pullback on the FED. If the market doesn’t like the FED today, I’ll be watching 280.33 on the downside for first support and then watching that 279-280 area for second support. On the upside, who knows, this thing could rip right to 293 for all I know. It’s just a huge meltup going on and everyone has FOMO about missing it. Just crazy.

 

XOP – The XOP is still creeping along path 1 from Sunday’s decision tree, but it hit the wall at 30.91 on Tuesday. The index pulled back and gave up last week’s highs of 30.27, so now we are back in last week’s range, which in itself is a bit bearish. The next level is the 29.60 low from last Wednesday. If 29.60 breaks, there really isn’t much to keep the E&P’s from getting a head of steam to the downside and making a run back to 28 to test last week’s lows.

 

I’ll be sitting on the sideline until the FED decision, but I think there are two possibilities that could happen Wednesday afternoon. First, the XOP could spike back up toward 31 if the FED gives the market what it wants. If that happens, I’d probably be looking to get short against 31.50, but I’d be cautious and would definitely cut the trade quickly if it got anywhere near 31.50. If the FED disappoints the market, I’ll be watching the 29.60 level for a possible play long there against a stop of 29.40. If the XOP takes out both the 29.60 level and then closes that Tues-Wed gap at 29.40 from last week, then the long play is probably dead and we might be looking at 28.

 

The 28 level is the place where I’m most favorably looking to get involved and I think there is a good possibility that the 28 level does not hold on the next test, which would be the third test of that level. If it breaks down, I’ll immediately start watching for sharp breaks in a few of my favorite stocks for swing plays on the longer term. I haven’t been doing many swing plays, as the market is just too fairly valued in the current 30 range and there just isn’t much upside to getting in with the XOP in the 30 range. If you want to get long, either wait for the 31.50 break OR wait for the sub 28 pullback. Getting long anywhere between those two events is just gambling and trying to guess where the market is going. Don’t guess, just wait for the market to tell you what to do. The odds of success are much better that way.

 

I’m also watching the XLE and if I make a long play, I might do it there instead of the XOP. All of my short plays lately have been XOP because it has shown relative weakness to both the SPY and XLE. Always try to get short the weaker stock and get long the stronger stock. The XLE has definitely been the stronger index play as bigger money has been cautious and seems to prefer staying with the big caps and their stronger balance sheets

I’m not looking at any individual stock plays today. I’m more interested in trying to follow the overall market direction. A few individual names that I am watching are XOM at 80 and COP at 65. Both of those are kind of my first warnings for the XLE and XOP. If we get a big down day today, I’ll post on Thursday the stocks I’m watching for possible long swings if the market breaks down.

 

In the non-energy area, I’ve built up a decent position in APVO around 87 cents. There is something brewing on this one and they have some promising science. They also already have one drug that is income producing. The price is down on an offering, but that offering has been snapped up by some pretty interesting names, most notably Steve Cohen and Point72, as well as Jon Plexico at Stonepine Capital. Those are two pretty smart players who rarely make mistakes. I expect that a couple more interesting names will show up on 13G’s in the near future. The stock has some catalysts coming in the next six months and there are warrants at $1.30, so there’s a good opportunity for at least a 50% gain on this one. As with all microcaps, it’s very risky, so do your own due diligence on it. Also, scale in slowly and leave some room to add on the inevitable public shakeout that will happen just before they mark this one up.

 

Trading Plan for Monday, March 18, 2019

I posted this week’s decision tree on Twitter (which you can see on the right side of the page). Three major options for trading this week, all set out below.

Volatility was very low Wednesday through Friday for the XOP, which could be suggesting that we get some type of move soon out of that contracted range. The SPY showed a similar pattern, but at least the tight range there was nearly at new highs, not so for the XOP which still lags well below that 44 level that it reached back in October when the SPY was at 293.

 

I’m focused on only trading XOP this week, especially if this market turns into a short opportunity. If you want to be short energy, don’t short the XLE. XOM and CVX have just been too strong and they make up about 42% of the XLE. Go for the easier kill on the short side, which is the relatively weak XOP.

I usually try to post my trades, at least my first entry, but most of my trades are entered with multiple 500 share pieces and posting all those entries/exits is something I’m sure nobody wants to see or wants on their Twitter timeline. I try to consolidate the trade down to my average price, but mostly I just post my plan and leave it at that.

 

A lot of OPEC meeting talk early premarket today and this will likely whip oil around most of the day.  OPEC doesn’t really seem too concerned with anything that is going on and they are simply happy to just hold the course of what they are doing. That’s probably an indication that things have stabilized for oil and the price range might be pretty narrow for the next few weeks.

 

XOP – I think there are basically three paths the XOP can take this week: 1) it opens strong and runs right toward the 31-31.50 range for a breakout attempt, 2) it moves down to retest the 28 level and turns upward for another run at 31, 3) it moves down to retest the 28 level, fails and breaks down. There’s always the possibility that it does absolutely nothing and moves sideways all week between 28 and 31, but that’s not really going to do us much good from a trading plan perspective. I think the odds of 1 and 2 are about equal, with 3 being much less likely.

 

Path 1 – If the market looks strong, I’ll be looking for an early pullback Monday to the 29.60 level to try a long. That area in the 29.60-29.75 held as decent demand Wednesday through Friday, and it should hold again early this week. I’ll be looking for a bounce into last week’s high of 30.28 for a possible breakout attempt to 31.

 

Path 2 – If the market breaks down at 29.60, it could make a move back toward the 28 level, which was last week’s low. That would be the third test of that level and a big decision for the E&P’s. If this were to occur, the trade sets up good for a long OR a short with a fairly tight stop. It’s just one of those points where you have to play it by ear depending on what the SPY and Oil are doing. My first choice is to take a long position at 28 and look for a big bounce, especially if the market moves a bit under 27.80 and takes out all those stops before reversing upward. If the market grabs those stops and reverses, it could be a very sharp run back toward 31 and out the top. The risk on the trade would likely be about 50 cents for a 2-3 dollar profit if we can get a bounce back to 30 and maybe a run at 31. The more difficult trade is going to be a short at the 28 level, mostly because there isn’t yet anything to play off of for a risk controlled stop.

 

Path 3 – The dangerous path for the XOP would be to start the week off by moving straight down to the 28 level for a decision there and failing at that level. If 28 fails, there isn’t much to keep the market from running right to 24. I think this is probably the least likely path of the three options. If this option looks likely, the play for me is to try and let the 28 level break and then wait for a bounce to retest it from below, at which point I can get short and use something just above 28 for my stop. If the trade works, I could probably get by with a 50 cent stop and possibly capture 3-4 dollars on the downside. If the SPY continues it’s normal strength, I don’t see path 3 as being very likely.

 

Individual Stock Trades:

SM and CRZO – These two are looking to merge. Not sure why. Maybe two weak companies think they have more chance to survive if they combine into one larger weak company? Or maybe a combined entity becomes more attractive to a larger company. This seemed to be the approach when Newmont acquired Goldcorp, then almost got acquired by Barrick. Either way, I really want no part of either E&P, just listed here for the news aspect.

PE, MTDR, JAG – I will be interested in these three stocks if the XOP rolls down toward the 28 level. I’d like to wait as long as possible for a breakdown of 28 before taking long positions here. If the XOP does break down, I think there is so much negativity surrounding the small/mid Permians that they will take a huge dip down for great bargains. I’d like prices on these three down near the Christmas Eve levels.

HAL – Much the same plan as the three Permians listed above, I’m hoping for a dip down toward the 25 level for a long.

APC – This one technically sets up very well for a long attempt on any break above 46. There’s easily room for a run to 50.

XOM – This is the stock that worries me right now in energy and the one that will likely break down first if energy rolls over. That 80-81 level looks like strong supply. If XOM rolls over, there could be downside to 74-75 area. Keep an eye on this one as an early overall energy sector signal.

COP – I feel the same about COP as I do about XOM, it’s probably the early signal for the E&P’s. The 65 level has been support since early January, so keep an eye on that level for a breakdown and early warning for the E&P’s.

CNQ – This is one that I sometimes take my eye off of, but probably shouldn’t. It is setting up a nice base and could be a nice long if it can break the 29 level. If money wants to move to longer term projects and get away from the high decline rates of shale, this could be the way to go, especially if heavy oil continues to rise in price vs. light.

EOG – Watching the 82-84 level for a long attempt. This company is still quality and I think people are getting too down on it. If the overall sector moves down, this one could be unfairly punished and would be a great bargain long.

RRC – Natural gas play that has a very defined technical setup. There’s a strong base around 9.25 and good consolidation action sloping down from 12. If this one takes out the trendline that began back in mid-January and can take out 11, it could take a shot at 12, and then more.

APA – The strength in this one is pretty amazing considering almost everyone hates the stock. It has the best momentum of any of the major XOP components and could continue to move toward 40 if the E&P’s strengthen.

 

 

Trading Plan for Friday, March 15, 2019

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.

 

 

 

 

Trading Plan for Thursday, March 14, 2019

Today is decision day for the XOP. On Sunday I posted my plan for the week and the 30 level is where I had the market running into big supply. The E&P’s hit 30.16 on a spike after the EIA number and then consolidated the rest of the day closing at 30.01. Thursday we either get that rejection at supply or we get a run to 31. Let the market tell you what to do, this isn’t a spot to simply try to be early by guessing which way the market will go. Energy could still break your heart and turn down sharply if the overall market fails up here at the top of the range after a possible upthrust pattern yesterday.

6:45ET Complicating things a bit, I now see Trump/Xi have delayed trade talks into April. Not a huge negative, but not very helpful for today.

 

SPY – SPY made it to the 282 level I was looking for, topping out at 282.38. Wednesday’s high and low will be Thursday’s most important price points. First glance at the daily chart suggests that Wednesday’s action could have been a stop hunt and upthrust. I do not want to see the market take out Wednesday’s low, as that could be a disaster. We closed last week at 274.49, which is quite a run so far. If price tries to break out above 282.38 and fails, there could be a pretty good pullback, possibly all the way back to 278 or even the 200 ma at 275. Things looked very strong Wednesday and I’m thinking we probably move above and hold that 282.38 level and consolidate for most of the day, but there is some significant risk for the bulls today. How much more gas is in the tank for the overall market? From a purely longer term technical standpoint, there really isn’t much to keep this thing from taking a shot at the highs, and then the 300 level. While that would excite almost everyone, that could also be the head portion of a head/shoulders pattern in the making. It really depends on how fast this market melts up once the FOMO kicks in at new ATH. The primary watch today is to make sure Wednesday wasn’t an upthrust trap.

 

Oil – Oil managed to finally break above the 58 level and is sitting 58.47 as of about 5:30am ET. Looks like another solid day, but I wouldn’t be surprised for this to come in a little and retest 58 before the market opens. One concern though is Gold, it’s down almost 1% premarket, with gold miners down even more. That’s not a great sign for commodities overall. A stronger Euro has been keeping the dollar in check, but the Euro looks like it might have hit some resistance for the week in the 1.1375 area, so the dollar could gain, which usually isn’t a help for oil. The OPEC MOMR is also out today.

 

XLE – Energy closed last week at 63.90, so it’s gained about $2 this week to 65.98. It has climbed above both the 8 and 20 day ma’s and seems to be taking aim at the 67 level. It is lagging the overall market at bit, as the SPY broke to new highs Wednesday, yet the Energy ETF was still well below the highs from last week. XOM and CVX have had strong runs and could be topping a bit with the SPY. I’m watching 65.65 as the first meaningful level on the downside, followed by 65. On the upside, keep an eye on Wednesday’s high of 66.01. RDSA and BP are both up about +.6% early premarket and FTI is up a huge 6%, so that is a good signal for the US market. BP had a big day yesterday up about +3.2% and it took out the 200 day ma easily.

 

XOP – The E&P’s had a great day on Wednesday, closing up about 2%. The Permian names were the weakest of the group, with CXO and PE red and PXD (+.5%) neutral. The E&P group has almost perfectly followed the path from the decision tree posted on Sunday, rising right up to the 20 day ma at 30. This is a big spot and we likely either get a total rejection and run back to 28 or we get a breakout past 31 with a shot at 31.50. On the downside, 29.90 and 29.60 are the points to watch. On the upside, 30.16 is the first resistance, followed by 30.35. Once it clears 30.35, it should be a quick run to 31, where the real fun could begin.

Longer term, there is a pretty big Wyckoff accumulation formation going on in the weekly chart. I’m really starting to feel like this thing might be sitting right on the springboard, ready for a markup. I’m considering a long position if we take out that 30.35 level today. This formation is set to explode at 31.50 and there is room to 40. What I’d rather see though is a light volume fade back down to retest that 24 level one more time, but I think it’s going to be difficult to take out the 28 level. Anywhere between 29 and 30.35 is a difficult spot for longer term traders, and trying to play the up or down breakout is pure gambling. Let the market tell you which way it’s going and then follow. At 31.50, get long for a breakout OR let it fade to 28 and buy the dip for a longer term bounce. Any other plays than that are just low odds.

 

Swing Trade Setups:

Most of the swing trade setups from Tuesday and Wednesday are still in effect, so I won’t cover them again except to say that MGY, CLB, GLNG and APA are all looking like solid options.

APC – Watch the 45.50 level for a breakout and run to 49.

COG – This is the quality name in the natural gas space and I like it for a breakout of the 26 level. If it can take that out, there’s space to 29.

EOG – If you are very bullish and very aggressive, this one is a long using that 86.14 as a stop. Would be nice to get a dollar or so pullback to give this trade a try.

GIFI – Anyone interested in the offshore market should give this one a look. It could be a nice play using a tight 20 cent stop to $9 and trying to capture a run to $11.

HES – This one goes against the grain a bit as a short trade setup. It’s purely a math play using $60 as the stop and looking for a breakdown to the 50 day ma around 54. The trade needs the SPY to roll over also. Keep the stop tight though, because if it does break through 60, it could be at 70 in no time.

CDEV – I strongly considered trimming this position on yesterday’s run to 9.40, but didn’t pull the trigger. I wish I would have. I might lighten up if it takes another run today.

 

Be careful out there today and make sure you don’t get caught up in what could have been an upthrust on Wednesday. Any failure at yesterday’s high is an important signal.

 

 

Trading Plan and Swing Trade Ideas for Wednesday, March 13, 2019

It’s been a pretty slow week so far with decent moves in the first hour or two and then absolutely nothing to trade after 11 am. Market having some hesitation about moving out of the top of the range, but I think it takes a shot at 282 soon, if for nothing else than to grab the stops that have built up there.

 

SPY – Basically a dollar range on Tuesday from 279-280, just consolidating for a breakout attempt. Not a bad run though considering we closed last week at 274.49. The important levels on the downside today are 278.85 (YLow), 277.72 (8day ma) and 277.61 (20day ma). On the upside 280.07 (YHi) and 281.87.

 

Oil – Watching for a breakout of the 58 level. API on Tuesday afternoon was a 2.6 million draw, so maybe looking at a decent EIA number at 10:30ET.

 

XLE – Tuesday was a bit of a reversal from what has been happening over the last couple of weeks as the XLE (+.7%) was weaker than the XOP (+2.6%). This is almost solely due to XOM (+.3%) and CVX (+.2%) being neutral. The big spot for XLE today is the 8 day ma sitting at 65.37, which is also YVWAP.  Market could rotate around that for much of the day. On the upside, the levels come in at 65.52 and 65.65. On the downside, 65.00. I’m optimistic on energy today and if this can break yesterday’s high, there is room to the 66.50 area. I’m not interested in shorting the XLE up here.

 

XOP – The XOP has had two very strong days and has run right to the 8 day ma which sits at 29.46. I posted the decision tree for the XOP on Sunday and we are getting very close to where I had the market stalling out into supply. I’m watching the 29.50-30 range for a defined short setup. I think the short opportunity most likely arises just after the EIA number. If I get any spike up into the 30 area, I’ll be starting a short position for a run back down to 28. If the market gets near 31, I think the short idea will likely be proven wrong and we could be looking at an attempted breakout of the 31.50 area. If we get near 31, all my shorting will come to an immediate stop. That weekly Wyckoff accumulation is still nagging me a bit, which is causing me to be very cautious with my short activity. I think we get definite resolution this week on XOP, either we make a run at 31.50 and these E&P’s heal or the whole house of cards comes tumbling down with them.

 

Top Swing Trade Setups:

EOG – This one is still relatively weak and I’m wondering if there is some bad news coming. I’m watching the 85 level to start a long swing position with a stop around the Christmas lows. The closer entry I can get to those Christmas lows, the better.

COP – This was the weakest stock on my board Tuesday, down about -.4%, which is significant seeing as how the XOP was up +2.6%. I’m watching the 65 level for a possible swing long.

MPC – The refiners were fairly neutral Tuesday, yet MPC was down about -.6%. I’m watching the Christmas low levels around 55 for a possible swing long. PSX might be a better play for refining as their pipeline assets are really attracting positive market action, but the risk reward on it isn’t very good. Take a look at KMI, WMB and ENB to see that the market has been running these midstream assets up nicely.

XOM – This is probably the only individual name that I’m looking at for a short, as my preferred short remains XOP. That 80 level is causing some difficulty and if the SPY turns down, XOM likely follows it. This has been an incredible run from 65 to 80 and it might be time to pull back at least a third of that move, which would take it back to around 75. Keep an eye on RDSA also, it is in a very vulnerable position and could fail at the 62 level.

APA – Most people don’t like APA, but if you look at the chart, it’s still hanging up there around the highs since Christmas. The relative strength is interesting and I’ll keep an eye on this one for one of the first E&P’s that could breakout to the upside.

CDEV – It’s finally getting a bounce after hitting a low of 8.28. Almost everything has gone wrong on this one. Earnings were disappointing, the decline rate issue was very negative and to top it all off they did a $500mm offering on Tuesday. It was an attempt to clean up some near term debt, but still likely a bit negative. Maybe they figured things were so negative that they might as well throw the kitchen sink in there and get it all over with now so this one can heal. I’m in this one from 9.77, so I have a long way to go to get back green. CDEV has been one of my favorites for awhile and I’m willing to give them every benefit of the doubt, but it needs to get going soon.

MGY – This one is consolidating nicely in the 12-12.50 area and could be getting ready for a breakout of the 13 level. It has a very well defined breakout point and could have room to 15 if it gets running.

CLB – Purely a technical breakout play, if this one can get some steam over 69, it could go on a nice run to the mid 70’s.

LLEX – This is a microcap and very risky. They have made some nice progress getting their act cleaned up lately and if this one drops back near $1, I’m going to pick up a position for a longer term hold. Again, this is one of those that is played only with money you can afford to lose.

GLNG – Normally, I hate everything related to shipping, as these businesses are the worst. However, the LNG business is hot lately. Cheniere has been moving well, and TELL (which is a stock I love) and NEXT are starting to get some attention also. GLNG operates the ships that transport LNG. It has formed a nice Wyckoff accumulation pattern and looks to have completed a phase C spring and could be getting ready to move. Watch that 22 level and then the action at 23. If those two levels break, it could run to the upper 20’s.

RIG – This one made a very strong move Tuesday and is trying to breakout to the upside through the $9 level. It stalled at the 8 day ma at 9.12, but if it can get past that, there is room to the 11-12 area. The market has become a bit frustrated with the short cycle, high decline onshore market and money could start shifting back to longer term outlooks. ESV, DO and RDC don’t seem to have as much positive movement right now, so I’m still a bit cautious on offshore.

APVO – One free bonus non-energy microcap. I picked up some of this at .85. I seriously traded microcaps years ago and this one is showing some interesting activity. Feels like some players are positioning here for a big pump and dump in the coming months. The financing with Lincoln Park Capital initially got my attention, as well as the recent offering with the $1.30 warrants. Yesterday afternoon AH, Point 72 (Steve Cohen) announced a 7.3% stake in the company, which just further confirmed my thoughts that something is brewing here. It probably goes mid .90’s today, but should settle back in around .85 for awhile longer. Could be an easy double or more. These are strictly lottery tickets that keep me entertained when energy is slow. Just fun money.

 

Trading Plan for Tuesday, March 12, 2019

SPY – I completely missed it Monday and wasn’t expecting that kind of upmove at all. The momentum could continue Tuesday. The 200 day ma sitting around 275, combined with Monday’s low of 275.23 should make a very well defined stop for any long trade. If you want a tighter stop, you can use the 8 and 20 day ma’s at 277.65 and 277.15 respectively. Yesterday’s VWAP fell right between those ma’s at 277.56. If the market breaks all of those points convincingly to the downside, then get out. It feels like the market wants to make a quick run right back to the top of the range around 282. Once we get there, the question is do we break out OR do we create a upthrust trap and then rip straight down. Anyone who got short has their stop sitting just over last week’s high. They are sitting ducks at this point begging to be attacked. I’m not interested in trying to play SPY, just too much volatility for me at this level. It’s just a leading indicator for me.

 

Oil – 6amET Oil at $57.34. Oil followed through on the big hammer candle created on Friday and it’s possibly forming a nice base here to break out over 58. That hammer on Friday showed that there is significant demand in the 55 area, so keep an eye on that level as a stop. As oil heads toward the top of the range, also watch for a possible Trump tweet. He seems to take a shot at oil anytime it gets strong. Also, keep an eye on the EURO, it could be making a longer term reversal after failing to break to the downside out of the range that has been forming since last summer. The spot to watch there is ~1.14 on the upside and 1.1175 on the downside.

 

XLE – Last week’s Norway Wealth Fund liquidation sure faded quietly into the background didn’t it? It was just the latest flavor of the day and never an issue to begin with, as it was old news which began in late 2017. The Twitter effect was in full force on that piece of “news”. A few people tweet about it, everyone mindlessly retweets and the snowball grows, whether it was correct or not. All of those positions have likely been hedged and I wouldn’t be surprised if they have already lined up block buyers for a majority of dispositions at previously agreed to prices. If you got short on that news, Monday’s action is a great reminder to be careful following the herd.

The XLE bounced off the 50 day ma on the February 8th low and bounced off the 50 day ma again this past Friday for another low point. Monday’s action closed the Thursday-Friday gap and managed to hold Thursday’s range, which is a fairly strong move. Much like the SPY, there are probably stops sitting up around 67 that could get attacked. I’m watching the 8 day ma at 65.35 and 20 day ma at 65.41. Those two ma’s are sitting right together, so that’s going to be significant resistance. I’m not really interested in shorting the XLE. The big four (XOM, CVX, BP, RDSA) have all been very strong and I’m not going against them, although XOM does look vulnerable around 80. If I’m going to short, I’m going to attack the weak link, which is the XOP.

 

XOP – The XOP is lagging both the SPY and XLE. It managed to take out Friday’s highs, but just barely, and it didn’t come anywhere near closing that Thursday-Friday gap like the XLE did. I’m looking for the E&P’s to get carried up to the 29.50-30 level, mostly on the strength of the SPY. As the XOP moves up, I’ll be looking for a spot to get short. The first level of resistance for Tuesday is 28.96. The next level of resistance is the 8 day ma at 29.50, then the 20 day ma at 30. I’m looking to use the area between those ma’s as my stop on a short, playing for a run back down to 28. The first area of demand is 28.46-28.55.

 

Top Swing Trade Setups:

EOG –  I’m looking for demand to show up around 85 for an attempt long using the Christmas lows as my stop.

COP –  Demand has shown up around 65 for most of 2019. Friday bottomed out at 64.91 and Monday’s action held 65.34 and created an inside day based on Friday’s action. I’ll be looking for an early test of that 65.34 low and will use 64.91 as my stop for a long attempt.

MPC / VLO – The refiners bounced off daily chart support Monday and both MPC and VLO finished at the highs of the day. MPC held the 58.85 level most of the day on Monday and that makes a good stop to try and play long for a continued run up. HFC also has significant support on the daily chart for a possible long play.

HAL – I don’t think this is going to get into a buy zone Tuesday, but I’m watching the 25 level in the next few days for a long attempt. With all the XOM and CVX money that’s supposed to be flowing into Permian production, HAL should get a bigger boost than SLB since they are more focused on North America.

RRC / EQT – In the natural gas space, both of these stocks are very close to support on the daily chart. EQT has formed the larger base, but RRC is probably my preferred choice for a long using 9.25 as my stop. Both of these stocks have very well defined stops and good potential for profits making the risk vs. reward very favorable.

Small/Mid Permians – I’m in CDEV right now and losing with it. I was too early. My trade theme here is to place trades on PE, MTDR, JAG and CDEV to cover the four best bets to get bought out in the coming months. I’m guessing that RDS.A is probably the most likely buyer of a smaller Permian. I’d like to see PE get closer to 16, MTDR closer to 15 and JAG closer to 8.50.

 

In other news, I’m completely sick of hearing about Brexit. I finally took the final step and muted the word on my Twitter timeline (along with bitcoin, Kashoggi and Mueller). Brexit is like that crazy drama girlfriend who threatens a breakup for months (and in Brexit’s case – years) and never seems to have the guts to follow through. Just be done with it and move on.

Trading Plan for the Week of March 11-15

I posted the decision tree chart for $XOP on Twitter. I’ll go into the details here.

The plan for the next couple weeks takes a look at five different paths for the XOP, three of them are tradable, two of them are not. The two untradable paths:

 

A) The XOP catches a bid Monday and rips straight up and out of the top of the range at 31.50 this week. This one isn’t really tradable (or likely in my opinion). Given the weakness in $SPY and oil, combined with the huge supply sitting in that 29.50-31 area, I just don’t see the market being strong enough to run right through that to new highs. There is a fairly concrete stop placement around 27.70, but the profit target just isn’t big enough to take the trade, as it could run into supply anywhere above 28. The uncertainty and small size of the reward doesn’t really justify the stop required, especially with the danger of a gap down any day this week.

B) The XOP simply consolidates sideways between 28 and 30. This is the second untradable situation. Not interested in getting chopped up in a tight range.

 

So that leaves three paths that are tradable:

1)   Total collapse. The market dropped to a low of 27.83 on Friday, which was a test of the February 8 low of 27.80. It held, but the bounce wasn’t that encouraging, closing at 28.06. I expect we get an early test of that low and if it fails, the next level of demand is around the Christmas lows in the 24 area. A short is possible for this path. I’d find an entry that I liked and use Friday’s high as my stop. There was a huge gap down Friday morning from Thursday’s close, so the short should work as long as XOP stays out of that gap area. So use that 28.60 area for a stop of about 50 cents and try to catch the break down under 28. If the market does collapse, the trade could be worth as much as 3-4 dollars, which is pretty good for only risking 50 cents.

2)   Bounce, Failure and Move down. This path assumes that we find a little strength early in the week as bulls try to hold that 28 level and then make an attempt at getting back in the 29.50-31 range.  This can be played two ways: either try to get long on any move down Monday morning and play for a bounce toward Friday’s 28.55 high (which might also capture Option A above which I said wasn’t tradable) OR second, let it bounce toward the Friday highs and when it fails to get into that Thursday-Friday gap, short it using the intraday highs as your stop. I don’t like the long option, but I might give the short option a try hoping that it fails around 28.50 and then moves down taking out 28 for a big move. This trade could have an even bigger R (reward to risk) than number one above. You could probably work with a 25 cent stop around that 28.50 level and profit twice that much with just a move back to 28, plus a big home run if 28 breaks.

3)   Bounce, Consolidation, Retest, Move up. This path is really just a variation of number two above. If you are longer term bullish, this path might set up a great trade to the long side. I’d look for strength and a bounce early Monday to that 28.50 area, a failure there, then a weak low volume pullback to 28. The trade then sets up at what would be a third test of the 28 area. If it looks like things are going to hold, get long using 27.70 as a stop. If things look weak, then find a safe place to get short using the intraday highs (likely around 28.50) as a stop and play for a breakdown similar to 1 and 2 above.

 

One other thing to keep in mind here is the weekly XOP chart. That 24 area is meaningful because that was the low area established back in early 2016. At that time, oil was trading low 30’s and even dropped to around 26. Oil closed about 56 on Friday, so you can see the disparity we are dealing with. In 2016 we had an XOP of 24 with oil sitting 30, 2019 we are looking at an XOP of 24 with oil sitting 56. That makes it very difficult to use levels in the XOP. For instance, if oil did drop to $30-40 range in the near future, you would think that the XOP would move pretty far under 24. Basically, the valuations are very different now than they were in 2016, so using that 24 level as support is going to be tricky.

 

The weekly chart does show one positive thing for me though. Most of what I do is based on Wyckoff principles, and if you take a look at the weekly XOP chart, it is setting up a beautiful Phase C Spring possibility after a long accumulation. If we assume that to be the case, then the disparity in pricing above works to our favor for a great longer term bullish setup. The logic is that with oil sitting 56, the XOP shouldn’t be sitting anywhere near the lows established when oil was sitting 30. If this is indeed a spring forming, then it is the final shakeout before turning up sharply and taking out 31.50 for a run back to the top of the range around 44. If I see any evidence at all over the next month or so of this being a spring, I’ll be loading up heavily long and will be adding big on any breakout over 31.50. No clue if this really is a spring, but that’s the plan for now until evidence says otherwise.

 

One last thing, these aren’t predictions, they are simply options and possible setups. Things can change very quickly in the energy world. The point is, if you are going to trade then have a plan. Sometimes the plan works, sometimes it doesn’t. But I can definitely say that having a plan definitely makes success more possible than simply shooting from the hip every day without an overall view of what you are doing. I have no idea if the market will actually do what I have set out above, but I do know what I will be doing if it does, and that makes all the difference in trading.

 

Overall, I’m starting to lean a bit bullish in the market. I’m not immediately looking long, but I think if SPY approaches the 263 level, you have to start thinking of grabbing a few longs. Oil had a great day Friday, making a strong recovery and putting in a nice candle on the chart. Oil had the opportunity to collapse, but it didn’t. I’ll be watching that 54.50 level, it should be important for the upcoming week.

 

One other interesting thing to watch is the XLE. On Friday it dropped right to the 50 day moving average. If you take a look back to the February 8 lows in energy, notice that the XLE stopped right on the 50 day moving average on that day also. See if that 50ma holds this week and how price reacts to it. I’ve traded a the XLE over the last couple months, but recently it has become nothing more than XOM and CVX movement. Almost all the money coming to energy right now is in the big caps and most of that into the big four: XOM, CVX, RDSA and BP.

 

I only have two positions right now. I’ve got CDEV which has grown to about a 125% position averaged around 9.77 and PE which is only about 20% position at 17.15. I was too early in the CDEV position and it has been eating me up this last couple weeks. Definitely hurts, but I still like the small Permian theme and will continue to pursue it with PE, MTDR, JAG and CDEV.

Other stocks that are getting close to buy zones for me: HAL, EOG, APC, RRC.

 

Overall Market and Energy Direction Outlook

Sitting here this morning looking at charts trying to get some idea of how to plan out the next month of trading. There seem to be two popular outlooks around Twitter. One view is that we are about to break out to the upside and rip to new highs. The other end of the spectrum is that we are due for a pullback very soon after this nine week run. Which will it be?

 

If you just look at the chart and the public opinion, the winning view seems to be breakout and run to new all time highs. BUT, the concern I have is that the market usually does the thing that punishes the most people. Almost everyone is long here and getting longer as we approach the top of the range at 280. I can’t find anyone I know who is short or even suggesting to get short at the top of the range. It’s a FOMO driven rally and nobody wants to be out of stocks in fear of missing the big move. The fundamentals and economic numbers don’t support this pace of value increase (not that fundamentals have mattered anyway for the last few years). I get the feeling that everyone is on the same side of the boat right now and leaving themselves open to a severe adverse move. Who else is left to buy?

 

Another concern is the FED. The narrative right now is that easing is on the way with rates possibly moving lower. I just can’t get behind this view. How in the world can the FED even possibly consider lowering rates if the $SPY makes a run at 300? If anything, they should be using that spike to RAISE rates so that they can have more ammo for the inevitable collapse of the 300+ bubble. Make no mistake, this market will eventually reach a top, and when it does the move down will be fast. Wouldn’t it be more beneficial to the FED to have a little more ammo to ease the fall rather than wasting their ammo here lowering rates as we are ripping to 300?

 

I posted a $TLT chart last week which showed a big area around 122.50-123 to keep an eye on. If the chart rejects there and starts down (rates up), this would probably be the first clue that a blowoff type top in the $SPY is coming. If a parabolic move happens, the FED will have no choice but to try and control it (raise rates) before it goes full bubble. Greenspan got caught in the same situation. Keep an eye on the narrative change from easing to possibly raising and tightening. If that happens, the $SPY is going to react just as it did in October when Powell suggested that tightening was coming.

 

As for energy, money is moving into the bigger cap names, which shows mostly in the run in the $XLE. The problem child in energy is the $XOP. It is lagging both the $XLE and $SPY.  This suggests to me that energy’s future move is going to be tied directly to the $SPY rather than to the price of oil.

 

The $XOP hasn’t recovered nearly as much as the $XLE or $SPY. It hit a high of almost 45 back in October when the $SPY was sitting at 293. The $SPY has bounced back to 278, however the $XOP is barely hanging on to 30. The $XOP would have to increase by 50% just to get back to those October highs, while it would only take about a 5-6% move in the SPY to get back to October highs. The E&P’s appear to be somewhat dead money and I just don’t know what would make them suddenly rip 50% to get back to highs. They should be doing better right now, but they aren’t.

 

The $USO shows the same characteristics as $XOP. It’s sitting 12 right now, after a high of 16 in October. What this suggests to me is that the $SPY run right now isn’t about economic strength. If it was about economic strength, oil would be doing much better. A strong economy needs oil, but oil and the E&P’s aren’t recovering. This suggests that the $SPY run is all about something else other than the economy and that something is FOMO, China Deal, and FED manipulation with more easy money. All that easy money still isn’t stoking inflation, which may be another reason oil isn’t ripping like the overall market.

 

Given all that, I have a really difficult time putting money in E&P’s for any type of longer term play. I just don’t see the odds pointing to a run up, however I see high odds that they could totally collapse if something goes wrong with the overall market. It just doesn’t lead to a high odds profitable trade. Of course that doesn’t mean they aren’t tradable for short bursts, they most certainly are, just not for longer term swings.

 

This coming week should tell us a lot about the health of this market. I’m guessing we get a rip to the upside and we could be looking at new all time highs soon. I really don’t want to see this. I don’t think it is long term healthy. I would much rather see the market slowly consolidate back to around 260 and then start a slow grind upward. If this market rips 300 in the next month or two, there’s a real danger that a blow off top develops which could lead to a bear market. Everything has been going perfectly lately, can that continue? The FED has given the market everything it desires, what more do they have to give, especially with a bubble possibly forming? If the market is running on a possible China deal, then what happens after the deal is done, what do we focus on then? And where are those black swans? You know they are out there somewhere and it has been a long time since one appeared. Could the market handle it, or would there be mass exodus if one appeared? Who is left to buy if it did occur? Everyone is sitting on the same side of the boat long right now, at some point that will change, and it will change quickly.

Be careful out there this week, it is going to be a crazy one.

Energy Sector Notes, Week Review and 2/11-2/15 Preview

I’ve been lazy making my energy sector notes, but I’m trying to get myself back in the habit of writing at least once a week. I use this site as a way to organize, so it is really just a record of my trading thoughts. Please don’t take any of this as trading advice, because it isn’t meant to be that. It’s mostly just random things kicking around in my head about energy stocks and the sector.

 

This market can really test your patience sometimes. During January, my plan was to let the SPY climb up to the 260 level and then try to get a position short for a retest of the lows. That never materialized. Instead, the market ripped right through 260 and shot all the way to 273.50. After seeing that incredible strength, I decided this past week to scalp long thinking the market had a fairly clear path to 280. Everything was going well until Wednesday when SPY hit the 200 day moving average around 274. It rejected and the market got kicked down to 268. I’m not too worried about the small pullback, as it seems to be just a normal move. It’s important that SPY stay above the 260-263 range for now, as well as above the 50 day moving average around 261. If the market can hold the 50 day, then I think we probably continue on to 280 and avoid any breakdown. I’ll continue to scalp to the long side next week until the market says to stop doing it (which would be a break of 260-263).

 

Once the overall market direction is established, now to the energy sector, XLE and XOP. The big cap energy names are definitely doing better than the small caps, especially the smaller E&P names.  The XLE still looks strong even after this week’s pullback and the action on Friday afternoon was bullish. The XLE made a move exactly to the 50 day moving average and bounced hard, almost closing green and forming a nice hammer candle. I think we definitely play off that low of 62 next week. For me, the most important point for the XLE is still that 61.30 level. If we do somehow break that 62 low very early on Monday morning, I’d look to try a long at 61.30 and then see how it played out on any bounce over/under 62. It’s a trade you could cut at 61, but if it does regain 62, it could run a long way up. Great risk/reward.

 

The XOP is the index that really concerns me. Friday’s drop took it all the way to a 50% retracement of the big runup from Christmas. It bounced intraday along with the XLE, but it still finished down about -1.5%, or about three times more than the -.5% decline of the XLE. The E&P names are definitely showing relative weakness. A couple weeks ago I was very bearish on the group, but I adjusted my view last week once the SPY showed it was firmly back in the 260-280 range. I’m not yet ready to move back to the bearish camp. The line for me on the XOP is 27. If it can hold that level and the SPY holds the 260-263 range, then I think we are fine and should get a sustained move higher. If it moves under 27, then I’ll have to rethink my entire view of the sector.

 

If I decide to take some long swing trades, I’ll definitely be looking at the smaller Permian names, specifically: Parsley (PE), Matador (MTDR), Centennial (CDEV) and Jagged Peak (JAG). The pipeline capacity issues seem to be resolved enough that spreads are not hurting the Permian players as badly as they were a couple months ago. My main reason for trying to get into these four names, with an XOP around 27, is because I think any of the four could easily be a buyout candidate in a down market. My favorite of the bunch is Parsley. I’d like to see PE and MTDR around 16, CDEV around 11 and JAG around 9.50. I think you could comfortably play those against the December lows and probably even add if those lows get retested. If the picture looks really bad on a move toward the lows, then just cut the positions. Entering something like PE with a $2 stop for a $4+ profit is a decent trade, especially at this kind of value and with the possibility of getting bought out.

 

I’d also take a shot at Devon (DVN), Apache (APA) and EOG Resources (EOG) if the sector drops back toward the December lows. None of them are any kind of buyout plays, just good value with enough volatility to make the risk worth it. Anadarko (APC) is also on the radar, but the story there is very negative and it seems to be the one stock getting the wrath of the whole sector. Things could get really ugly on that one and it will likely be one of my last buys.

 

One of my favorite stocks right now is Hess (HES). I am still kicking myself for not buying that down near 37. Hess got an extra push down during that December crush when one of the Exxon vessels got intercepted by the Venezuelan government. Exxon and Hess are joint partners in a huge development offshore Guyana and the discovery is absolutely monstrous, and it seems to keep getting bigger. That $20 bounce (almost 50% run up) was mostly due to that play and the surprising thing is that most people aren’t that familiar with it. I doubt we see HES anywhere under $45 again for a long time.

 

There aren’t many earnings reports this coming week. The only ones I’m really interested in are Occidental (OXY), Marathon (MRO) and Pioneer (PXD). Pioneer has been volatile on the last couple of earnings releases. Looking forward to what they say on the Permian capacity issues.

 

I’m not really interested in the services companies right now. I think Capex spending is getting cut by almost everyone and services is going to bear the brunt of that, possibly for longer than some expect. Most of that information was already priced in on the December move. I would have loved to have had Schlumberger (SLB) down around 36, but the recent run really doesn’t make it much of a value anymore. Same for Halliburton (HAL). I’d probably scoop a little SLB if it moved back to the 39 range, HAL around 28 and NOV around 26. One services play that I find interesting strictly on a technical view is Patterson UTI (PTEN). It has based out nicely between 11.50 and 13 and appears ready to breakout to the upside. Helmerich (HP) is also doing well evidencing some strength in the drillers.  PTEN would probably be a nice long play with a stop set on the other side of the 50ma around $12.

 

The worst stocks in the sector right now are probably the natural gas stocks. These guys just can’t catch a break. Even with the extremely cold weather, there just isn’t any excitement for natural gas. Just too much of it out there. I like Range Resources (RRC) and I’m tempted to move in here around $9. I think RRC was the first stock on my board to reach the December lows, APC was also pretty close. Sometimes all I’m looking for in my trading is an extremely stretched stock that is ready for a bounce off of a defined low. RRC definitely meets those requirements right now. Antero (AR) seems to be a disaster hitting new lows and EQT appears to have some internal issues with the Rice guys still trying to take back the company. The clear quality name in natural gas is Cabot (COG), but I really wouldn’t get interested in that unless it somehow got under $22.

 

Ok, well that went on a little longer than I wanted, but I think I covered most of the stocks on my board. I’ll put together this week’s trading plan and try to post some thoughts on that early Monday premarket. And thanks @Texan4Life, I needed something to prod me back into writing, much appreciated.