Oil and Gas Stocks Outlook for Wednesday, September 27
Sep 27, 2017 Trading Blog
Sorry for the lack of posts Monday and Tuesday, sometimes I get a little burned out on the internet and just have to take an internet break. Twitter is a great thing, but people who constantly insist on making everything political really make Twitter more of an aggravation than a benefit sometimes. Sometimes I just like to clear my head and trade without distraction, and Monday and Tuesday were good trading days where I wanted to do just that. Anyway, it looks like the action might be slowing, so I have more time to write.
Great action on Monday and Tuesday, but I’m starting to get a little cautious on the regular “buy the first dip and hold” intraday trading plan. The XOP has run from 29 to 34 without any break and it is clearly getting well away from the 8 and 50 day moving averages. A regression back near those averages could be coming soon, but trying to pick tops is usually a loser’s game, so the plan is to just watch today and see what develops and try to find a spot early to get long safely with a tight stop.
Last week I singled out XOM to watch as a measure of the overall sector health and it has responded well by regaining the 80-84 range. It continues to hold above the 8 day moving average and could make a drive for the top of the range at 84, crossing the 200 day moving average in the process. CVX and BP are hitting the highs from December 2016, while RDSA is making new highs. Keep an eye on XOM and if it breaks back down below 80, be ready to get cautious on the sector for a pullback.
Outlook for Wednesday: Last week I wrote that this market could hit 35 and it looks like that is right where we are headed. The 200 day moving average comes in at 35.36. I still haven’t seen any supply overhead. This market will continue to grind upward until it encounters supply. At this point, I have no idea when or where that supply is going to show up. My best guess is that supply shows at the 200 ma, which also corresponds to that range we were in for March, April and May right before we took that summer dive. I’d say the first supply shows at 34.86. I’m not saying we reach that today, but probably in the coming days.
One other curious point to keep an eye on is 34.13. That was the low just days before the election in November. Sometimes swing points like that can draw some attention. We closed at 34.12 on Tuesday.
Trading Plan for Wednesday: It will be the same old boring plan, buy the first dip and hold for an intraday run. It has been a great couple weeks for doing just this, so might as well just keep going with what is working, until it doesn’t work anymore. Keep it simple and don’t overthink it. I know a pullback is probably coming, but I’m not really interested in trying to play that short. There just isn’t any selling pressure and that makes shorting nearly impossible to do accurately or with tight money management.