Oil and Gas Stock Daytrading Scans for Wednesday, July 8
Jul 7, 2015 Oil Stock Scans
Great reversal Tuesday and having the watchlist of stocks that were relatively strong as compared to the OIH and XLE really paid off. SLB and EOG were great targets that had sustained trends, while MCF and MRC both provided great fixed risk trades. NOV and CLR were great bottom picks and provided decent fixed risk entries, but were a little fast to develop. Even the penny stock setups of NADL and MHR came through for good trades. The only pick that was difficult to trade was PSX, which had an absolute collapse in the middle of the morning, but did manage to get green by the end of the day. Quite honestly, everything in the energy sector was a good trade today. Days like today make trading look easy.
I’m looking for the momentum to continue Wednesday and my main setup of interest on most stocks will be any weak open with a red to green move. Most of the stocks in the sector are showing a very similar pattern, but I have picked out a few that I feel are a little better than the rest:
Chesapeake Energy (CHK) – Chesapeake had a large candle reversal Tuesday that recovered a lot of the damage done over the past couple of weeks. Anytime you can get a big candle like this that covers many days of prior action, the momentum can be very strong, especially if much of the past few weeks was high levels of shortsellers. If there are many, this could really squeeze. Another factor here is the volume, almost 42 million shares, which is one of the top volume days this year. This kind of volume can produce major turning points. This is a stock that has probably been overhyped to the downside, which leaves good opportunity to the upside. There isn’t any real resistance until the 13.50 area.
Chevron (CVX) – Chevron is a stock that has really been crushed over the last couple of months, and especially over the last 9 trading days. As you can see from the chart, there isn’t much to stop CVX from being attracted right back up to that $100 magnet. Big volume on today’s candle. Try to find a weak open for a fixed risk against the low of day and ride the uptrend as far as possible.
Oil Services ETF (OIH) – Since most of the oil service stocks have a very similar pattern given the sharp action today, the prudent and safe play is to simply trade the Oil Services ETF rather than trying to get cute and maximize range on an individual stock. I’ve tried to get fancy and go with a single stock, and I’ve picked the wrong stock and missed the low hanging fruit. We are playing overall sector movement Wednesday, so just go with the ETF and collect the move. Again, looking for any weak open to get long with a fixed risk.
Phillips 66 (PSX) – Third day on the scan list for Phillips 66, but the chart still looks good and it should make another attempt at breaking out of the 82 level. Be careful with this one though, it had a sharp unexpected dip Tuesday and I’m not sure what caused the severity. It’s still got plenty of intraday range to make it a profitable play.
Transocean (RIG) – I wanted to get an offshore driller on the scan list since the entire group had a great day. ESV, SDRL, DO, NE, ATW all could be plays tomorrow. I favor RIG due to the increased volume today and the size of today’s candle. This is a stock that will probably get a weaker open as people look to take some profits, but it is also a name that has a ton of shorts in it, so if you want to play it, you will likely have to be quick on the open.
Range Resources (RRC) – Natural gas is another division that I wanted to get on scan for Wednesday. EQT, AR, SWN and COG all showed signs of life today. I’m keeping my eye on RRC due to the large volume day on Tuesday.
Seventy-Seven Energy (SSE) – Everyone saw the turnaround in energy today and the momentum players will be out in full force Wednesday. Many of those players go looking for low priced targets that can be pushed, but also provide plenty of liquidity for easy entry and exit. SSE fits that description and could get big action Wednesday. It’s down almost 50% in about a month, and you can bet that the momentum players will spot that as very oversold and ripe for a trend reversal, possibly also catching some shorts unprepared.
Tags: Trade Scans