Oil and Gas Stocks Outlook for Friday, September 22
Sep 22, 2017 Trading Blog
It was another good day for the continuing uptrend in the energy sector with a smallish inside day that that should break to the upside on Friday. The XOP range was very tight, only 42 cents, but was really only about a quarter after the first thirty minutes. Volume was light at 9 million shares traded. Basically, it is the same story as we have had for the last 6 weeks, just no sellers anywhere. As I posted a couple days ago on Twitter, if XOP doesn’t incur any sellers soon in the 33-33.50 level, we are likely going to shoot to 35 really quickly.
Daytrading was once again horrible. I pretty much ignored the sector after lunch, as the range was only about 10 cents from noon until close. Absolutely nothing I can do with that.
The only concern I had about Thursday’s action was XOM closing back below 80. I really wanted to see this regain that 80-84 range and stay well within it and make a run to the top, crossing the 200 day moving average along the way. It closed at 79.90 Thursday. It isn’t much below the range, but it definitely needs to get back above 80 and stay there to close out the week.
Outlook for Friday: Yesterday was a nice inside bar with a lower tail, and that usually means the next day is going to be an up day. I expect that we might make an attempt to test the lows of that tail first and then make a move for the highs in an attempt to breakout to the upside. 32.65 should act as good support on the first downside test, with 32.50 the next level under that. If those levels hold, it will be back into the 33-33.50 area for an auction test of the high value area. Definitely be careful if we get into this range. Eventually, sellers have to appear and when they do it could be sudden and the movement down could be sharp. Also, trading long above 33 is a dangerous low odds area long. I’m not saying don’t do it, but just be a little quicker on the trigger and use somewhat tighter stops.
Trading Plan for Friday: Sometimes there is only one way to play a current move and Friday’s trade plan is the same as every other day this week. Simply look for the early morning dip and buy it. That is about as simple as it gets. I haven’t been looking for shorts at all this week and won’t be looking short today, even as we get close to the top of the range. Until we see some supply, shorting will remain a no go.
Anadarko Petroleum: I’m not really sure how I feel about the APC move to buyback 2.5 billion in stock. My first thought is why not pay down debt instead? +8.2 % in the stock price on this news is just crazy. Seems like the energy sector is finally joining the scam of buybacks that has plagued the rest of the market. Too much increasing free money in the system chasing an ever decreasing too few shares, no wonder the market keeps making new highs. Why buy earnings growth by taking risk on new wells when you can just buy earnings growth by decreasing the number of outstanding shares? The great false PE game, create a higher P (Price) with a manipulation of the S (Shares) without a change in the E (Earnings). That isn’t true underlying growth of the economic system, it’s simply manipulation created by free money. This is why I quit trading based on fundamentals a long time ago.