Oil and Gas Stocks Outlook for Thursday, November 16
Nov 16, 2017 Trading Blog
What I thought was going to be a boring week has turned into a great trading opportunity. I figured this would be a week of consolidation of the gains from the last few weeks, but instead we peaked for a couple days and just fell straight back down. The question now is where does this pullback stop?
Earlier in the week I had picked the XOP 33.75-34.00 level to start some longer term buying and we almost made it to the lower edge of that range yesterday. That 25 cent range sits right between converging 50 day and 200 day moving averages. It also represents the last swing high from that run back in September.
I did some buying yesterday and will likely do more today if the XOP continues to fall. The next support is likely around 33 and then the last swing low around 32 from late October. I think the 33 level probably holds on this move down, but that 32 level is a possibility. If the XOP somehow takes out 32, then I’ve probably made a mistake here and will probably hold off on completing my positions and possibly even lighten up if things look really bad. If we take out 32, then there really isn’t much to stop the fall all the way to 29 to test the lows again, which would complete the broadening formation that had me concerned a couple weeks ago.
Outlook for Thursday: The XOP rolled over late Wednesday, which makes me think that Wednesday was a distribution day and there is likely more selling to be done. I’d like to see a selling climax at some point to put in a short term bottom and sound the signal that getting back on the long side short term is the way to go. I will be buying today if we reach the 33.50 level. I still don’t recommend shorting this market because the rips back to the upside will be very sharp and it is hard to time it right to avoid those spikes if you are short.
Trading Plan for Thursday: I will be sitting and watching the first hour to see if we get that run down to 33.50 or if we get a big bounce here. I’m leaning toward more downside, but wouldn’t be surprised if bargain hunters came in here first thing this morning and made an attempt at pushing the index out of the topside of yesterday’s range. If that attempt fails early, it should be a fairly quick move to test the lower side of yesterday’s price range.
Individual Stocks: I bought starter positions in APA, DVN, NFX, PE, RRC, SLB and NOV yesterday. I had my eye on COP, EQT and NBL but didn’t get them. One curious thing is that most of the small caps that I watch didn’t really pull back as much as the larger stocks. PES got hit a little, but ECR was green, FMSA green, NBR green. I was really hoping these would have major pullbacks, but no luck.