Shorting the Onshore Drillers: NBR, HP, PTEN
Mar 20, 2016 Trading Blog
Sorry for the lack of posting guys, I’ve been trading other things over the last 3-4 months and just now getting back into energy stocks since things seem to have stabilized a little. All I have done over that time in the energy sector is short the XLE, and that isn’t much fun to write about day after day.
It’s been a nice bounce off the bottom for the entire sector over the last 6 weeks or so, but the run may be coming to an end. I’m looking to short a few energy names this week and the subsector that appears the ripest to retreat is the onshore drillers. I’ve got PTEN (Patterson UTI), HP (Helmerich and Payne) and NBR (Nabors) in my sights tomorrow to find a spot with a very defined risk to try and hop on board a reaction.
PTEN rolled first and has taken out the 8 day moving average after an upthrust on a relatively high volume day. HP also took out the 8 day on average volume. NBR barely held on to the 8 day, but the volume was heavy. PTEN and HP are showing clear breaks of the uptrend line from early February. PTEN is my first choice to short, but keep an eye on the entire group.
I’d like to see an early pop on PTEN toward the 17.75 range, HP around 61.50 and NBR around 9.35 to take a starter position short.
Tags: Trade Scans
Oil and Gas Stock Daytrading Setups for Tuesday, August 11
Aug 10, 2015 Oil Stock Scans
Energy finally got a bid today and just about every stock in the sector was green. PBF and IMO off of yesterday’s scan were big winners and very easy to catch today.
I have no idea if this momentum will carry over to Tuesday, but the one fringe clue that tells me that it will is gold. Gold took out 1100 like it was nothing, and just about every commodity stock followed suit. The commodity advance wasn’t just an oil move.
While just about every pattern in the energy sector put in a solid green candle off the bottom, not all those patterns are tradable. A good trade has a fixed risk and defined stop which produces a reward larger than that stop. The setups below meet these rules and offer low risk, high reward opportunities, without being knife-catch type trades.
Tetra Technologies Inc. (TTI) – TTI picked the right day to come out with great earnings, as the stock was up 32%. I think someone knew this was coming, because Thursday was also a big volume upward spike. Daytraders will be all over this one tomorrow, especially given the big day in energy overall. Look for a pullback and try to get long using $6.00 as a guide. Be nimble here, it could be very volatile.
Cameron International (CAM) – Cameron climbed back over the 200 day moving average and is probably the strongest stock in the oil services sector. The 200 comes in as support at 50.21, although I don’t think the stock pulls back that far. The play here is to look for some weak open profit taking and grab a good entry playing the stop off the low of the first 30 minutes. There’s a real chance it gaps open and never looks back, so be quick.
Callon Petroleum (CPE) – Callon has been on a very strong run and the play here is simply for the momentum to continue. Looking for an entry around 8.00 on some profit taking and a run up toward 9.00. The 7.75-8.00 range should be good support for the stop.
Suncor Energy (SU) – SU, CNQ, IMO and CVE are going to stay on the daily scan until they stop trending up. All three Canadian energy companies have been trending up strong and I don’t see any reason that should change Tuesday. The 8 day moving average should be good support around 28.31. I’m looking for an entry around 28.50 in Suncor for a tight 25 cent stop and possibly a run toward $30.00.
EQT Corp. (EQT) – The natural gas stocks are due for a big bounce and EQT is the quality pick in this sector. The 21 day moving average provides good support at 75.72 for an entry if the first 30 minutes pulls back from Monday’s 76.69 close. The 8 day moving average comes in at 75.64 for an added bit of support. Look for an entry within 50 cents of the ma’s and see if the stock can make new highs on a bounce.
PBF Energy (PBF) – I had this refiner on last night’s scan and it was a big winner. I’ll be playing it again Tuesday for follow through momentum. PSX, TSO, HFC and VLO all make good momentum plays in the refining sector.
Helmerich and Payne (HP) – The onshore drillers have been strong for the last two weeks and HP is the quality stock in this area. This stock is another pure momentum play, but the thing to notice here is the danger that might develop for several of the energy stocks. There is a really good chance that the move from 55 to 63 is a bearish flag. Draw a trendline from the low of 55 under the lows through today and be aware that if the stock breaks that trendline, it could sink quickly. Honor stops on these stocks. Even though they look strong, as we have seen over the last year, they can weaken quickly.
Tags: Trade Scans
Oil and Gas Stock Daytrading Setups for Tuesday, August 4
Aug 3, 2015 Trading Blog
It looked like energy was going to pull out of it’s downward spiral mid-morning, but things fell apart and most of the sector closed toward the lows again. Definitely have to be nimble in this market and not stay too long in trades.
Not much happening off yesterday’s scan of mostly long ideas. The two ideas that did work were KEG and ENSV. Enservco even saw it’s highest volume day in a long time. Also, the one short idea that I posted (PDCE) worked pretty well and I wouldn’t hesitate to go back to it tomorrow.
Here’s what looks decent for Tuesday:
Ensco PLC (ESV) – Offshore drillers are getting crushed right now with SDRL down 9.9%, ATW down 4.9% and RIG down 6.3% today. Strangely, Ensco did not follow, finishing the day down only 1.3%. The same divergence happened yesterday with ESV easily outperforming the others in the field. If the offshore drillers catch a bid, ESV is the first choice for a long play.
EOG Resources (EOG) – I had EOG ready for a long today, but just as things started turning up, the entire sector rolled over. EOG is one of the strongest independent E&P companies out there and it is currently sitting right on the 8 day moving average at 76.44. If it can hold the 8 day on Tuesday morning, it could get some run to the upside. Enter close to the 8ma and put the stop just under it if things go south.
Gulf Island Fabrication (GIFI) – Gulf Island builds offshore oil rigs and other structures. As you can see from the chart, there is some upward momentum even in this down sector. If it can take out 12, the next stop is 13, which could happen quickly. The ideal entry on this would be a little pullback toward 11.50, and then a fast run at 12.
Helmerich and Payne (HP) – Onshore drillers were strong today with NBR, HP and PTEN all being green most of the day before the entire sector went down. HP has the strongest financial position of the group and is the better daytrading stock. I’m looking for it to put in a higher low here at 58 and try breaking that downtrend line from mid-June. Hoping for a pullback in the morning and play it off of Monday’s low for a stop. The same setup should work well with NBR and PTEN.
U.S. Energy Corp (USEG) – Daytraders and chatrooms will be all over this one tomorrow, so if you are interested in these penny stock plays, this is the place to be in energy. The best move is to let it come in a little in the morning and base out, then look for a higher low and play off the morning low of day. If it can then get green, the run could be on.
Chevron (CVX) – I don’t normally try to pick the bottom on stocks, but Chevron has reached a really ridiculous situation in my opinion. Look for it to gap down and wash out to around 83 and grab a small position looking for a big bounce. Once it finds a bottom, the stampede back into the stock will begin. When you look around the energy sector, it is clear that Chevron is a quality stock compared to the others and I think it is just getting unfairly crushed with so many funds dumping at the same time. Nobody wants to be in energy right now, which is the exact time we should be looking to buy.
Tags: Trade Scans
Oil and Gas Stock Daytrading Scans for Monday, August 3
Aug 2, 2015 Oil Stock Scans
Just when things were looking up for the energy sector, Exxon and Chevron ruin the party with terrible earnings. It’s looking like the early week sector run up was nothing more than a dead cat bounce in a sharp downtrend. I’m guessing there aren’t going to be many long opportunities this week, so I will be posting some short ideas in addition to the few long ideas I can find. If the sector is going to continue this downtrend, then we might as well make some money off of it.
Here are the best daytrading setups for Monday:
Suncor Energy (SU) – Suncor is a great play on it’s own, but one thing I noticed reviewing charts this weekend was that all of the Canadian energy companies followed through on their early week bounce and were not brought down by the Exxon and Chevron earnings. Suncor is the best of the bunch having closed above the 8, 21 and 50 day moving averages. The 50ma is at 27.78, so I’m playing long off that point for my stop.
Imperial Oil (IMO) – Imperial is another Canadian company with a great bounce off the bottom without giving much back on Friday’s downturn. It isn’t above the 50ma yet, but it is within striking distance of that ma which is at 38. Other Canadian companies that might be candidates long are Canadian Natural Resources (CNQ) and Cenovus Energy (CVE).
EQT Corp. (EQT) – All of the natural gas stocks are having a difficult time right now, but EQT seems to be rising above the rest of the group. After reviewing the financials of AR, SWN, COG and RRC it is easy to see why investors are moving toward EQT as the preferred natural gas play. While the rest of the group continues to sink to new lows, EQT has been rising, and as you can see from the chart above, could possibly break out to the upside. The formation provides a great fixed risk entry position to try a trade long with a stop on the 21 day moving average at 76.54.
Frontline Shipping (FRO) – Frontline operates a fleet of crude oil tankers and has recently been moving up with many other shipping companies. As you can see, it broke out from 3 and has been consolidating between 3 and 3.25 for the last couple of weeks. The trade here is to play it long with a stop on 3.00 hoping for a breakout to the upside of the consolidation zone. There is a chance it breaks down to fill the gap to 2.75, and maybe that is also a good spot to play it, but I’d like it to show more strength and avoid filling the gap and breaking out to the upside past 3.25.
Cameron International (CAM) – My long pick out of the oil services sector is CAM. The chart above shows a strong 2 day candle formation on the dip below 50, which could possibly be the low for this stock. 50 is definitely the line if the sand and the play is for an entry close to 50, using the 49.75 level as a tight stop. The 50 level was good resistance earlier in the year and seems to have turned to support around May, with another test in early July. When it finally broke down, it reversed quickly suggesting that there are many buyers looking to get in on any dips below that level.
PDC Energy (PDC) – Although you could probably throw a dart and hit a short candidate, PDCE has an advantage in the trade that many stocks don’t have. In the chart above you can see that the 200 day held as good support in March and again early in July before it was broken in mid July. The stock is now retesting the 200 from the underside, and if it fails, it could be a quick fall. The advantage here is that the trade has a fixed risk stop to play off of. Look for a short entry near the 200 ma and place the stop above the 200ma far enough to be outside the noise level.
Other Ideas
Enservco Corp. (ENSV) – This is a swing trade candidate. I played this recently from 1.02 to 1.20 and it looks like it may be setting up for a repeat of that move. If it dips under 1.00, it’s probably worth a swing long back to the 1.20-1.30 range in 30 days.
Key Energy Services (KEG) – Key Energy is falling fast and this is strictly a play to catch the bottom for a huge bounce. Watch the volume and if it looks like capitulation, there could be a 20% bounce in the stock. Very risky trade, so play small.
Valero Energy (VLO) – I’m not sure about the refiners since they have already had a big run, but if oil keeps falling, these stocks will continue to benefit. Valero is back at that breakout point around 64 and has had difficulty getting back above the 8 and 21 day moving averages, which is why I’m a little hesitant on it. If it can get back above those two levels, there may be another leg to the upmove.
Tags: Trade Scans
Difficult Trading In The Energy Sector, Monday’s Daytrading Scans
Jul 26, 2015 Oil Stock Scans
Sorry for the lack of updates last week, but there just wasn’t much going on from the long side in oil and gas. I spent most of last week trading gold, but hopefully this week energy can get things turned around, or at least get some kind of playable bounce. I’m not really interested in trying to catch falling knives or pick a bottom here, that isn’t my trading style. I’m primarily a long player and trend follower with entry setups that are dip based, so you can see why I haven’t been doing much in the recent week.
If we get a turnaround in energy, here are my favorite targets:
Cameron International (CAM) – Cameron has been relatively strong in the oil services sector and had a solid bounce day on Thursday with a positive earnings report. The oil service names were weak again on Friday, but CAM seemed to consolidate it’s gains up near the top end of that big candle from Thursday and the price could move up from there. Would like a dip for an entry Monday before lunch and play the stop off of Friday’s low.
Marathon Petroleum (MPC) – MPC gapped up a couple weeks ago on the Markwest acquisition and has been drifting lower ever since. It completed filling that gap late last week and also went right down the the 21 day ma where it reversed and put in a nice hammer candle. I’m looking for a dip early and then playing off the bottom of Friday’s hammer as a stop. If there is any momentum here, then it shouldn’t take out Friday’s low, especially with the 21 day ma and the top of that previous gap acting as support.
Newfield Exploration (NFX) – Newfield is one of the very few energy names that hasn’t yet broken it’s 200 day moving average. As you can see in the chart above, the stock is sitting right on it and could attempt a rally off that level if the sector shows any strength at all. This is a relative strength play as NFX has been much stronger than the overall sector and should turn quickly if the sector bounces. Looking for an entry around 32.50 and keep the stop fairly close to the 200 ma. If the stock starts to run away from the 200 ma to the downside, then bail out quickly.
Transocean (RIG) – I don’t really have much of a reason for believing in RIG, but this trade is more based on the risk/reward number and a very defined stop level. RIG closed at 13.26 on Friday, which is 2 cents below the low back in March. If a double bottom were going to happen, this would be a good spot. Pick an entry and see if this thing can bounce, if it drops too much below that March low, then you can probably cut it without a second thought. Seadrill (SDRL) is showing a very similar pattern. Sometimes trading is simply about the numbers and math, not the stocks.
EQT Corp. (EQT) – I wanted to get a natural gas stock on the list because I really think this division will bounce soon. EQT had a better than expected earnings report on Thursday and got a nice bounce off the bottom with that news. Friday was a weak day in the sector, but EQT consolidated up near the high of Thursday’s candle and could continue upward Monday. I also like Range Resources (RRC) in the natural gas division, but EQT probably has more upside as the good earnings report is still fresh in traders’ minds. Look for a dip Monday and play off Friday’s low for a stop.
Tags: Trade Scans
Oil and Gas Stock Daytrading Scans for Wednesday, July 8
Jul 7, 2015 Oil Stock Scans
Great reversal Tuesday and having the watchlist of stocks that were relatively strong as compared to the OIH and XLE really paid off. SLB and EOG were great targets that had sustained trends, while MCF and MRC both provided great fixed risk trades. NOV and CLR were great bottom picks and provided decent fixed risk entries, but were a little fast to develop. Even the penny stock setups of NADL and MHR came through for good trades. The only pick that was difficult to trade was PSX, which had an absolute collapse in the middle of the morning, but did manage to get green by the end of the day. Quite honestly, everything in the energy sector was a good trade today. Days like today make trading look easy.
I’m looking for the momentum to continue Wednesday and my main setup of interest on most stocks will be any weak open with a red to green move. Most of the stocks in the sector are showing a very similar pattern, but I have picked out a few that I feel are a little better than the rest:
Chesapeake Energy (CHK) – Chesapeake had a large candle reversal Tuesday that recovered a lot of the damage done over the past couple of weeks. Anytime you can get a big candle like this that covers many days of prior action, the momentum can be very strong, especially if much of the past few weeks was high levels of shortsellers. If there are many, this could really squeeze. Another factor here is the volume, almost 42 million shares, which is one of the top volume days this year. This kind of volume can produce major turning points. This is a stock that has probably been overhyped to the downside, which leaves good opportunity to the upside. There isn’t any real resistance until the 13.50 area.
Chevron (CVX) – Chevron is a stock that has really been crushed over the last couple of months, and especially over the last 9 trading days. As you can see from the chart, there isn’t much to stop CVX from being attracted right back up to that $100 magnet. Big volume on today’s candle. Try to find a weak open for a fixed risk against the low of day and ride the uptrend as far as possible.
Oil Services ETF (OIH) – Since most of the oil service stocks have a very similar pattern given the sharp action today, the prudent and safe play is to simply trade the Oil Services ETF rather than trying to get cute and maximize range on an individual stock. I’ve tried to get fancy and go with a single stock, and I’ve picked the wrong stock and missed the low hanging fruit. We are playing overall sector movement Wednesday, so just go with the ETF and collect the move. Again, looking for any weak open to get long with a fixed risk.
Phillips 66 (PSX) – Third day on the scan list for Phillips 66, but the chart still looks good and it should make another attempt at breaking out of the 82 level. Be careful with this one though, it had a sharp unexpected dip Tuesday and I’m not sure what caused the severity. It’s still got plenty of intraday range to make it a profitable play.
Transocean (RIG) – I wanted to get an offshore driller on the scan list since the entire group had a great day. ESV, SDRL, DO, NE, ATW all could be plays tomorrow. I favor RIG due to the increased volume today and the size of today’s candle. This is a stock that will probably get a weaker open as people look to take some profits, but it is also a name that has a ton of shorts in it, so if you want to play it, you will likely have to be quick on the open.
Range Resources (RRC) – Natural gas is another division that I wanted to get on scan for Wednesday. EQT, AR, SWN and COG all showed signs of life today. I’m keeping my eye on RRC due to the large volume day on Tuesday.
Seventy-Seven Energy (SSE) – Everyone saw the turnaround in energy today and the momentum players will be out in full force Wednesday. Many of those players go looking for low priced targets that can be pushed, but also provide plenty of liquidity for easy entry and exit. SSE fits that description and could get big action Wednesday. It’s down almost 50% in about a month, and you can bet that the momentum players will spot that as very oversold and ripe for a trend reversal, possibly also catching some shorts unprepared.
Tags: Trade Scans
Oil and Gas Stock Scans for Tuesday, July 7
Jul 6, 2015 Oil Stock Scans
It was a tough day out there Monday with oil dropping and the USO down almost 7%. Right now it is just a freefall and trying to trade from the long side is just an attempt at catching a falling knife. Tuesday will probably be a day where I sit with my watchlist of stocks that I think are a little stronger than the herd and wait for the market to try and rally to try and capture a big bounce move. Any other trades I attempt will be very quick scalps of developing short setups. These are the stocks that I will be trading if the sector rallies:
Schlumberger (SLB) Schlumberger was probably the strongest of the oil service stocks and actually put in a decent candle that could predict a move up Tuesday. It opened under 83 and managed to climb as high as 84 while closing at 83.49. The OIH was down 2.42%, while SLB (the largest component of the OIH) was only down .62%. I’ll be looking for the relative strength between the two to continue Tuesday. Would like a weak open around 82.50 to try and get in for a run.
EOG Resources (EOG) As I pointed out in Monday’s scans, EOG has held that 84-85 level several times since the first of the year and held it again Monday closing at 85.09. Much like SLB above, a weak open near 84 might be a good opportunity to catch a bounce without too much risk. EOG finished Monday down .68% while the XLE finished down 1.18%, so some relative strength there.
Phillips 66 (PSX) In Monday’s scans I set out a scenario of PSX opening weak and making a run at 82. The stock did open weak, but never really gave the 82 mark a challenge, but then again it still managed to finish positive for the day, which is much more than most energy stocks. I’m looking for a repeat of Monday’s scan with a weak open and an attempt at taking out that 82 level. The lower oil price should provide a tailwind to the refining stocks.
Contango Oil and Gas (MCF) Another stock that was on yesterday’s scan and I’ll be looking to play it the same way again Tuesday. I had a winning trade on this one early getting in at 11.69 and riding it for about a quarter. If the volume picks up in this stock, there is a good chance that it could run to 13 very quickly.
MRC Global (MRC) MRC Global has been holding the 15 level for the past couple of months and managed to stay above it again today in a very ugly market. The stock was only down .66% today as compared to the OIH services ETF which was down almost three times as much. While it isn’t going to be a huge gainer, if an entry close to 14.75 can be achieved, the trade could easily net 3:1 on that tight stop.
Advantage Oil and Gas (AAV) – This is a natural gas play that has been creeping up steadily over the past 4-5 months, even in the face of a down market. Other natural gas stocks like RRC, AR, SWN, COG and EQT have been getting killed, but AAV somehow keeps making new highs. It was up 3% in today’s horrible market. Keep an eye on it to attempt a breakout of the 6.50 level. Be aware that this is a low volume stock, so getting in and out quickly can be problematic. Monday was a decent volume day, which could be a clue of more volume to come.
Couple stocks to mention without charts:
National Oilwell Varco (NOV) – If you want to step out there and try to catch a falling knife, NOV may be a spot where it might be worth it. The stock dropped 5% today, which seems a bit much for a quality holding in the services area. I’m not saying buy it here, but keep an eye on it and if it has another day like Monday, starting a position by scaling in might be the way to go.
Continental Resources (CLR) – Continental just got crushed Monday, down over 7% closing at 37.09. This is high volatility stock and when the pile on starts, it can move a lot further than you think. I’m going to have this one on the watchlist to try and find a fixed risk setup to attempt to catch the bottom for a bounce. If you try to catch the falling knife, make sure you do it in such a way that your risk is fixed.
North Atlantic Drilling (NADL) – This is a penny stock play which has been holding tight on support around 1.15. It is a very high risk stock, but if an entry can be achieved near 1.10 and stopped at 1.00, it could be a 3:1 Reward:Risk play.
Magnum Hunter Resources (MHR) – MHR is another penny stock type play that could provide a nice return. It had a solid bounce off the bottom last week on heavy volume and the decline from that peak has been on fairly light volume, even in a highly negative market. Playing off a double bottom at 1.25 could provide a beneficial reward to risk play.
Remember though, if you guys are playing around with these dollar stocks, they can still bite you. They are low priced for a reason, mostly because many of them have huge debt load problems, which always carries the possibility of bankruptcy. Just be careful on these and do not carry them overnight.
Tags: Trade Scans
Energy Stock Scans for Monday, July 6
Jul 5, 2015 Oil Stock Scans
I’m looking for most of the energy sector stocks to be weak on Monday, so the best idea is to be looking short for quick scalp daytrades. The bigger money trades though would likely develop if the market surprised to the upside with a nice bounce. Try to stay with the trend for the short scalps, but be on the lookout for some swing ideas on the long side if the sector turns up. Here are my best trade ideas for Monday:
Cameron International (CAM) CAM has decent support around 50, as it has tested that level many times since the late April gap up. I’m looking for it to test 50, maybe dropping as low as 49 to fill the gap and then get a nice bounce. If it can base with a fixed risk setup, it will be one of my choices if energy stocks start moving up.
EOG Resources (EOG) If energy stocks start to run this week, EOG is my favorite choice for a ride on the long side. It has held that 85 level several times since the first of the year and had a nice tight candle on Thursday. Play this one off of 85 as the risk and see if it can give a 3:1 return. I’d also give this a play off of any washout on the open Monday. Could possibly even turn this into a swing trade if it shows good strength since the stop is fairly concrete.
Flotek (FTK) Looking for FTK to have a weak open and then a red to green move to take out the 13 level. If it can break out, it could be a quick 50 cent gainer, maybe more. There has been good volume over the last 7 trading days, so keep an eye on it and see if that volume is there Monday. There is a solid worst case scenario risk point at 12.25, but I’d probably base the risk off of how the stock handles the 12.50 level, which should keep the R:R at 3:1.
Ion Geophysical (IO) IO has been on a nice run the last two days and the play here is for a weak open and then a red to green move toward 1.50. Quick scalp trade, nothing more. It must show some volume early to be worth a play.
PDC Energy Inc (PDCE) This is probably my favorite short for Monday if the energy market rolls over. The thing to notice about this chart is 1) a big round number mark at 50 and 2) the 200 day moving average at 48. I think those two magnets will draw this stock down for a test of at least 50, but probably a test of the 200 ma at 48. The stock closed at 51.04, so there is some downside to work with. The 8 and 21 ma’s also just turned down through the 50 ma. The ideal trade setup would be a little pop to get short around 51.50, possibly playing the risk off 52.
Phillips 66 (PSX) Looking for a weak open, red to green and a test of the 82 level for a breakout. Refiners have shown the ability lately to run nicely even if the rest of the energy sector is red.
Contango Oil and Gas (MCF) The last scan of interest is probably the most risky. MCF is a light volume stock that seems to be basing out here around 12. Another few days of declining volume and low volatility and this one could break to the upside. As the overall energy market has moved down over the last two weeks, MCF has trended sideways, which is good relative strength. Big risk, big reward on this one, but if you can get a good fixed risk setup with the risk somewhere around 11.75-12, then it could be a high R:R trade.
Tags: Trade Scans