Oil and Gas Sector Opportunity, Scans for Monday, August 24
Aug 23, 2015 Oil Stock Scans
What a brutal selloff in energy names last week. Not a single thing you can do here except go short the XLE and just enjoy the ride down. That was my only play last week, which is the reason for the lack of scans and setups posted. Honestly, there just wasn’t a single thing worth playing long.
Now we go into a new week staring at the entire market falling right off the cliff, so I really doubt much is going to be available on the long side in the energy sector. It is just my opinion, but I think the sector has further to fall and many of these stocks will break down past their prior lows. The current energy stock situation reminds me of the commodity stocks in the 2008 plunge, which just got to ridiculous levels. Those stocks were also some of the quickest to recover and shot straight up once the panic was over for some of the largest gains of the recovery.
At this point, there is nothing to do but see where things bottom, but if you can time this market perfectly in a panic, there will be some monster gains over the next 6 months. Just do the research and stick with quality and sound balance sheets. I’ll be watching the market this week and posting my favorite longer term picks depending on how far things fall, so keep an eye out for that.
C&J Energy Services (CJES) – CJES has simply been crushed, which is completely overdone. This is a stock that has simply got caught up in the downdraft to ridiculous proportions. If you look at all the other completion service stocks, you can see this is a group issue, not a stock specific issue. This will be at the top of my list on any big dip and bounce Monday morning.
Callon Petroleum (CPE) – When the market is tanking hard, the best way to find a future winner is to look at the stocks that defy the market downdraft and hold tightly in place. Callon fits that description perfectly. Even with the market and sector declining, Callon is holding on to it’s gains off the bottom and still sits within a dollar of the 9 highs.
EOG Resources (EOG) – Another idea to keep in mind when making a list of targets in a down market is to stick with quality, and EOG is definitely quality. It is attempting to hold a higher low at 75, but I really doubt this is going to hold. Keep an eye on the retest of the 73 low that was tested twice within the last month.
EQT Corp. (EQT) – EQT is a natural gas producer. The natural gas stocks haven’t looked quite as bad as the oil stocks over the last 2-3 days, so maybe they bounce a little quicker and harder. EQT is the only natural gas stock I would trade right now. The chart is very similar to the EOG chart and I’m hoping the higher low at 74 holds, but I’m really expecting a test of the 71 low.
Nabors Industries (NBR) – I apologize for the tiny chart, but the pattern I’m really interested in isn’t on the daily level, it is on that 10 line which was touched back in December 2014 and January 2015. The stock is again sitting right on $10 and if it can hold that major support, it could bounce and run higher if the market turns. The best thing about this setup is that there is a definite place to put the stop around 9.75. If 10 fails and it starts running down, the risk is only a quarter, while the upside could be $2 plus.
Good luck out there guys, and keep it safe and honor those stops.