Oil and Gas Stocks Outlook for Monday, December 4
Dec 4, 2017 Trading Blog
It was an incredible week for oil and gas stocks surrounding the OPEC meeting and this week could see continued upside. The XOP took a shot at the highs on Friday, and probably would have taken them out, but got caught up in the SPY downdraft caused by the Trump/Flynn rumors. Those rumors seem to have cleared, so we may get another chance this week at the highs.
I’m looking for a test of the 37.00 level this week. Hopefully, we get that test on Monday and take the level out easily. Depending on how much supply is sitting just over 37, we could see the XOP as high as 38.64 this week. While that would be nice, I’d much rather see the index pull back a little to get into a few longs cheaply.
On the downside, I could see a retest of the 35.50 level. The 8 day moving average is sitting at 35.35, while a .618 retracement of last week’s move would find support at 35.27. The 50% retracement comes in at 35.55. I don’t see the market dropping much further than than 35.
Trading Plan for Monday: I’m going to watch for the first hour and hope that this market pulls back before taking another shot at the XOP 37.00 level. I would probably start looking to get long on any move down near 36.00.
Individual Stocks: I’m watching DVN at 38.00 for a long try today. The 8 day ma should hold at that level. If it doesn’t hold, I certainly wouldn’t mind adding more down at the 50 day moving average just over 37.00.
In natural gas, EQT is set up nicely for a long with the 8 day ma sitting at 58.75. I will be starting in long near that point.
In the services sector, I like HAL if it can drift back down toward 42. I’m not crazy about the services stocks, but the setup on HAL is solid and very risk controlled.
For refiners, I like MPC. Late last week it broke a downtrend that started in early November and should have room to move up. I would like to see a move back near 62.25 to start a long position.
All of the small cap stocks that I follow are still out of my buy zone and probably not anywhere near pulling back far enough to be interesting.