Oil and Gas Stocks Outlook for Thursday, November 9
Nov 9, 2017 Trading Blog
It was a little weaker than expected in the XOP yesterday, but the index held up and chopped around trying to consolidate the recent gains. Pretty good volume Wednesday with about 22 million shares and an 84 cent range.
I came into the day on Wednesday with a plan to play the dip under Tuesday’s lows and enter when price reclaimed Tuesday’s range, but the market was much weaker than I thought with the XOP dipping all the way to 35.80. It took about 3 hours to get the trade setup I wanted. I got a good entry around 36.30 and caught some momentum up to Tuesday’s close at 36.64, but the index got absolutely smacked at that point. I thought we would likely get some R/G momentum and then another consolidation for an afternoon attempt at the highs, but no luck. The market pulled straight back after the R/G rejection and knocked me out breakeven at 36.30. The rest of the day was simply dead with the index closing at 36.09.
Yesterday, I had some concern with the SPY possibly correcting soon. Today’s pre-market action is already down -.6%. The SPY action in the first 30 minutes will probably determine my fate today. If they don’t rip it right back up near green, I’m probably done for the day. I don’t see much point in fighting a weak SPY and a weak XOP with attempts at a long. I still have ZERO desire to short the XOP. With the lack of sellers we have seen recently, there will be some sharp rips to the upside, and many times in this type of tape the buys can come out of the blue and destroy shorts.
Trading Plan for Thursday: The action today is going to be difficult and probably more of the same grinding consolidation. As of 8:20, it looks like we are going to get a gap down near Wednesday’s lows. I could see this thing grabbing liquidity down here and possibly a dip toward the 8 day ma at the 35.50 level. I would definitely give it a shot long there with a stop on the 8ma, but only if the SPY is moving up strongly or has turned green. I’m not seeing much opportunity on the long side in energy today, but hopefully I’ll be surprised. Good luck out there today.