Oil and Gas Stock Daytrading Setups for Monday, August 17
Aug 16, 2015 Trading Blog
I missed the market action on Thursday and Friday, but looking at the charts, it doesn’t appear that anything positive was happening at all. From the looks of the charts, this week could be another negative one if energy stocks don’t find a bottom on a retest of last week’s lows. If you are playing long, it is probably best to stick with quality early in the week until the trend shows itself.
The biggest danger I see on most of these charts, and something I warned about last week, are the number of possible bear flags setting up on many of the charts. If the bottom channel of these flags start to break, many stocks could be headed down again very quickly. If you start seeing these flags breakdown, be extremely cautious about entering any long trades trying to catch a reversal or bottom.
EOG Resources (EOG) – If we are going with quality this week, EOG is definitely a great core stock. It formed a double bottom around 73 and has been in a slight uptrend over the last couple weeks. It also has the makings of a rough cup and handle pattern, although the handle is a little high. The 80 level seems to be resistance, so look for a little pullback and see how a retest of that 80 level develops. A long trade on the breakout with a tight stop could catch a move toward 82.
EQT Corp. (EQT) – EQT is the quality stock in the natural gas sector and it has set up almost identical to EOG in the E&P sector. There is a defined cup and handle pattern forming on the chart above and a breakout across the 80 level is a real possibility. I’m looking for a pullback entry and putting a stop below Friday’s lows for an attempt at catching the breakout.
Diamondback Energy (FANG) – Diamondback has a great looking chart that we can put an uptrend line under beginning at the late July lows. The stock has regained the 8, 21, 50 and 200 moving averages. The trend may top out at 75 before pulling back a little, but the setup here is a test of 75 and a pullback to the uptrend line for an entry and attempt at a breakout of the 75 level. Use the uptrend line to place the stop on this one. This stock should be in play all week as the trade may take more than one day to setup correctly.
Matador Resources (MTDR) – Matador is a really interesting chart, as there could be both a long and short setup here. One of my favorite plays is to short a stock trying to break up above the 200 day moving average. The 200 ma is huge resistance and more often than not the break above fails for a quick fall. In this case though, I’m not so sure of a failure and if it does manage to break above the 200 out of that cup pattern, it could run quickly to 26. Whatever happens, the move away from the 200 ma could be big in either direction. Watch the test of the 200 ma at 23 and trade accordingly.
Nabors Industries (NBR), Helmerich and Payne (HP) and Patterson-UTI (PTEN) – One thing I wasn’t expecting when I went over charts this weekend was the big collapse in the onshore drillers. These three stocks all had small continuation patterns forming and all three broke down in the direction of the previous trend. I’m not sure if this is a leading indicator of any kind, but definitely something to watch. If companies aren’t drilling, the oil supply may not grow as quickly in the future as some expect.