Oil and Gas Equities Outlook for Wednesday, February 7, 2018
Feb 7, 2018 Trading Blog
Just a short note today, kid and wife both home because of an ice storm last night, so I’m probably keeping it somewhat light on trading today since the concentration level is always a little lower with a full house.
It was a pretty good bounce yesterday on both the SPY and XOP, but I get this feeling that we haven’t yet seen the lows for this correction. For the XOP, I think we at least need to run down and test that 34 level again to see if it will hold. If it doesn’t, we may be looking at 32 on the XOP, which would be a full 20% correction (although some would call this a bear market). Given the huge runup, 20% isn’t as bad as it sounds.
On the SPY, we hit about 10% on the correction, but most of that was just parabolic blowoff that we accrued over the last month. We opened January 2 at 267.86 and Tuesday we closed at 269.13. This huge and painful correction everyone is complaining about basically took us back to where we opened the year a month ago. I mean what did we really give up, a month of gains? So what. If this correction is going to truly set the stage for further progress upward, we probably need to see it chew through some of the gains made prior to January 1. A full 20% correction on the SPY could definitely be possible (but probably not likely) and I think that would be beneficial for us in the long run.
For the SPY, I think that yearly opening day, January 2 level (267.40 to 268.80) is a mark to watch for overall market direction.
Outlook for Wednesday: I’m looking for a test down near the 34.15 level on the XOP to try and give this an intraday long attempt. That is really the only thing I see pre-market for today. I’m not interested in shorting today and will just sit and watch if today turns into another correction day.
If we get a a big up day or two, I’m probably going to cycle some of this XOP position so that I can pick it up again lower. Same for PE and JAG. Those two stocks are seeming to hold up well, but I’m not yet seeing any aggressive moves up in either, mostly just drifting along with the overall market so cutting them down in size wouldn’t be such a bad thing, especially if I can pick them up again lower.
Individual Stocks: I’m watching ECR for an add on that position. I should have done it yesterday, but got distracted watching a few other things and decided to let it settle out before adding. I’d like to see it drop under 1.90. The only other stock on my radar today is DVN. It has dropped down into the buying level for me and it is my first target if the XOP starts dropping again.