Oil and Gas Stock Scans for Tuesday, July 7
Jul 6, 2015 Oil Stock Scans
It was a tough day out there Monday with oil dropping and the USO down almost 7%. Right now it is just a freefall and trying to trade from the long side is just an attempt at catching a falling knife. Tuesday will probably be a day where I sit with my watchlist of stocks that I think are a little stronger than the herd and wait for the market to try and rally to try and capture a big bounce move. Any other trades I attempt will be very quick scalps of developing short setups. These are the stocks that I will be trading if the sector rallies:
Schlumberger (SLB) Schlumberger was probably the strongest of the oil service stocks and actually put in a decent candle that could predict a move up Tuesday. It opened under 83 and managed to climb as high as 84 while closing at 83.49. The OIH was down 2.42%, while SLB (the largest component of the OIH) was only down .62%. I’ll be looking for the relative strength between the two to continue Tuesday. Would like a weak open around 82.50 to try and get in for a run.
EOG Resources (EOG) As I pointed out in Monday’s scans, EOG has held that 84-85 level several times since the first of the year and held it again Monday closing at 85.09. Much like SLB above, a weak open near 84 might be a good opportunity to catch a bounce without too much risk. EOG finished Monday down .68% while the XLE finished down 1.18%, so some relative strength there.
Phillips 66 (PSX) In Monday’s scans I set out a scenario of PSX opening weak and making a run at 82. The stock did open weak, but never really gave the 82 mark a challenge, but then again it still managed to finish positive for the day, which is much more than most energy stocks. I’m looking for a repeat of Monday’s scan with a weak open and an attempt at taking out that 82 level. The lower oil price should provide a tailwind to the refining stocks.
Contango Oil and Gas (MCF) Another stock that was on yesterday’s scan and I’ll be looking to play it the same way again Tuesday. I had a winning trade on this one early getting in at 11.69 and riding it for about a quarter. If the volume picks up in this stock, there is a good chance that it could run to 13 very quickly.
MRC Global (MRC) MRC Global has been holding the 15 level for the past couple of months and managed to stay above it again today in a very ugly market. The stock was only down .66% today as compared to the OIH services ETF which was down almost three times as much. While it isn’t going to be a huge gainer, if an entry close to 14.75 can be achieved, the trade could easily net 3:1 on that tight stop.
Advantage Oil and Gas (AAV) – This is a natural gas play that has been creeping up steadily over the past 4-5 months, even in the face of a down market. Other natural gas stocks like RRC, AR, SWN, COG and EQT have been getting killed, but AAV somehow keeps making new highs. It was up 3% in today’s horrible market. Keep an eye on it to attempt a breakout of the 6.50 level. Be aware that this is a low volume stock, so getting in and out quickly can be problematic. Monday was a decent volume day, which could be a clue of more volume to come.
Couple stocks to mention without charts:
National Oilwell Varco (NOV) – If you want to step out there and try to catch a falling knife, NOV may be a spot where it might be worth it. The stock dropped 5% today, which seems a bit much for a quality holding in the services area. I’m not saying buy it here, but keep an eye on it and if it has another day like Monday, starting a position by scaling in might be the way to go.
Continental Resources (CLR) – Continental just got crushed Monday, down over 7% closing at 37.09. This is high volatility stock and when the pile on starts, it can move a lot further than you think. I’m going to have this one on the watchlist to try and find a fixed risk setup to attempt to catch the bottom for a bounce. If you try to catch the falling knife, make sure you do it in such a way that your risk is fixed.
North Atlantic Drilling (NADL) – This is a penny stock play which has been holding tight on support around 1.15. It is a very high risk stock, but if an entry can be achieved near 1.10 and stopped at 1.00, it could be a 3:1 Reward:Risk play.
Magnum Hunter Resources (MHR) – MHR is another penny stock type play that could provide a nice return. It had a solid bounce off the bottom last week on heavy volume and the decline from that peak has been on fairly light volume, even in a highly negative market. Playing off a double bottom at 1.25 could provide a beneficial reward to risk play.
Remember though, if you guys are playing around with these dollar stocks, they can still bite you. They are low priced for a reason, mostly because many of them have huge debt load problems, which always carries the possibility of bankruptcy. Just be careful on these and do not carry them overnight.
Tags: Trade Scans