Energy Trades for Monday, January 9
Jan 8, 2017 Trading Blog
Not much action in energy last week on the longer term timeframe, as we started the week with 76.00 as a point of decision for the XLE and ended the week right there with no decision regarding direction being made at all. I do feel like this was a sign of strength though with oil and natural gas both weak. UNG just got crushed, yet the XLE hung in there without selling off.
This week’s top trade is XOM. It was one of the weaker energy names closing at 88.52, but I think there is good support with the 200 ma at 88.10 and the 50ma just under that at 87.70. As the action proceeded Friday, a big buyer stepped in during lunch and strongly defended the 88.00 area. If XOM opens weak tomorrow, I will be taking the trade long anywhere between the 50 and 200 ma (88.10 to 87.70). I would not place a stop under Friday’s low, as there is a really good chance that the market could hunt those stops before turning up sharply. Size down on the trade and give it some extra room to work, say maybe down to 87.48.
My second trade for Monday is NBL. This is purely a technical trade on the pullback to the top of the prior range combined with the 50 day ma for support. Depending on the open, I’ll be looking to get long as close as possible to 38.00. I’m going to keep the stop fairly tight on this one and may end up trying it twice if it breaks Friday’s low on a liquidity run.
If I don’t get any setups in energy, I’ll be looking at consumer staples, specifically KO, SJM and KMB. If this market starts to pull back, these defensive names could get some money rotating in. Many of the staples are setting up with charts similar to the one below for KO. It’s got a nice tight base forming right on the 50ma. If volume comes into the group, KO could make a nice 5% run with a very small risk of about 25 cents.