Oil and Gas Stocks Outlook for Tuesday, September 19
Sep 19, 2017 Trading Blog
It was a fairly straightforward day on Monday, only one trade on the late morning retest of the lows at 31.75 for a ride back up to 32.00. Very small move, but it was about all the day had to offer. It was a smallish 45 cent range on the day with volume on the low side at about 14 million shares.
The action may not have been great for daytrading on Monday, but the action was very encouraging in the overall XOP picture. It was a day of consolidation on light volume, with price staying well between that 31.50 on the low side and 32.33 on the high side. We never really got close to either important level. Those levels will again be in play on Tuesday.
XOM has a very interesting pattern and may turn out to be an important stock to watch over the next week. That move down from 80 to 76 was huge, but it was formed so quickly that a clear V bottom occurred, which isn’t really the same pattern as the lesser E&P stocks. It takes some fairly large money to move XOM, and they did it quickly. Currently, XOM is sitting right at the bottom of the range that formed way back in late January through August between 84 and 80. If it can climb back above the lows of that range, it could make a run to the top of the range at 84. It would have to break the 200 day moving average on that trip, which would be very encouraging. However, if that 80-84 range provides big resistance, then it could easily fall back down, taking the rest of the sector with it. I really think the entire energy sector will go as XOM goes, so keep an eye on it.
Outlook for Tuesday: I could probably just copy and paste Monday’s outlook here. I think we make another run at the highs from last week, whether we fail there is probably going to be a coinflip. If price can take out 32.33, the next level comes in at the top of the range in the 33.00 area. If we fail at 32.33, I would expect we drop down and test that 31.50 mark and possibly a run down to the 50 day moving average near 31.00. More than likely, we simply get another sideways range day with very difficult trading.
Trading Plan for Tuesday: Same plan today as for Monday. Look for the early morning dip and buy for a ride back up to the highs. I’m not looking for any shorts, only longs. Even if we have an obvious failure on the test of the highs, I’m still not interested in shorting. This market has no sellers and buyers are clearly in control, which makes shorting almost impossible. First option for a trade is a buy the dip trade, the second option is a range formed at the highs that breaks upward to the top of the larger picture range. If a small intraday range forms around 32.33, I will look for a place to play a break of that range long for a run up to 33.00.
For the longer term trades, the plan still remains to wait until price retraces back to the 50 day moving average around 31.00. DVN, APA, RSPP and PE are at the top of the list for longs. NBL, NFX and CLR second choices. SLB is my favorite of the oil services stocks. My favorite speculative play is OAS if I can get an entry near 8.00.