XLE
Despite #oil breaking higher, no breakout on #energy ..$XLE still has some work cut out before becoming bullish. $CVX $XOM $OXY $SLB
Long Energy to FinancialsXLE to XLF has done a 78.6% retrace, should at least outperform over the next few years here.
Oil's analysis towards OPEC meeting (September 22nd)Oil is trading inside a weekly trading channel.
The price is testing the bottom of the channel and a weekly uptrend line.
The price was rejected by a weekly downtrend line
Bearish Scenario - In case of a bearish breakdown, Oil can reach to the 61.8 Fib level to complete a bullish AB=CD pattern
Bullish Scenario - In case of a bullish breakout, Oil will probably climb towards the top of the channel.
More analysis? More Trading Scenarios?
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IHS on CrudePotential rally breakout IHS in crude. Normally don't like IHS patterns but this one looks legitimate.
Short option for O&GERF has had a large run up relative to other companies in it's industry. There is a large wick with large volume, this is a sell signal to me. I'd pair this short off with some long XOP but either way I believe it should work.
Head and Shoulders Vs. Bearish BatXLE is slowly making its way towards a very interesting weekly support zone - 60-62$
Notice that this price zone is the 61.8 Fibonacci level from 2009 low and from 2016.
Also notice that it is the neckline of a weekly H&S pattern.
If it will break, XLE can fall to 55$ and maybe even 50$
If it will hold as support, the extremely bullish scenario is that it will climb all the way up to complete a bearish Bat near 95$
Obviously it will have to re-test the MA lines as resistance levels first
Agree or Disagree?
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Energy (D): GasolineThere are three if/else statements with this trade.
If price fills the gap set on December 2nd and shows signs of buying, go long.
Else, stay flat and wait.
If price reaches purple region as indicated in chart, go short.
Else, stay flat.
If price reaches "Buy Here" level, buy there.
- Odds are we will see some action in this trade as long as price does not gap beyond forecasted prices. Gas and oil essentially have a 1-1 positive correlation, so follow this asset for some clues/ indication on energy trajectory.
USOIL trade idea.....Going long on USOIL by using GUSH. USOIL just completed a 3 drive to a bottom pattern. We can expect a turn here. Panic selling this morning is tough to go long into but the rewards should be there. Set a stop just below $43.
THE WEEK AHEAD: XOP/OIH/XLE, COSTPremium Selling
For the umpteenth week in a row, there is little in the market for high quality premium selling plays. Screening for 52-week >70 implied volatility rank, you'll basically get one quality hit at the moment, and that is COST, which has dipped significantly on AMZN/WFM merger news. A few names are approaching that 70 mark, but they have earnings three to four weeks out; you might as well wait to put on volatility contraction plays around earnings announcements in those cases. I previously set out a nondirectional play in COST (see Post below) that I didn't enter, having been distracted by something or other; I may reconsider that play now that the market's had an opportunity to digest the AMZN news.
Other names, such as NBR (petro, part of whose operations are deep water),* RAD (pharmacy in merger and acquisition with WBA), and BBRY (a kind of WTF, why are they still around) are too small in dollar value to be worth playing unless you dive in and go straight-on covered call or near-to-the-money short put.
Directionals
I've been waiting for several weeks to put on a bullish XOP, OIH, and XLE play. Each time I look at them, it appears that oil has trundled lower on rising rig count, total stock build, lackluster inventory draw, or a combination thereof.
I've been primarily watching oil prices around the supposed average shale production break even at $40 to go long in one of these underlyings. We may be close enough for me to make a play, but I'll probably continue watching. Lower is better for either a net credit put diagonal or a Poor Man's Covered Call in these guys.
Low Volatility Plays
With VIX continuing on its sub-12 bender, there probably isn't a better time to go put-side low volatility strategy in broad index underlyings (SPY, IWM, QQQ, DIA) using either calendars, net credit put diagonals, or debit diagonals. These capitalize on volatility expansion and movement of the underlying toward the put side, ideally allowing you to exit the short put aspect of the setup at worthless and recapture any value left in the long at the expiry of the front-month short. Heck, the dam has to break at some point ... .
* -- I regard most companies that rely substantially on deep water operations as largely doomed here. Most deep water operations require high per barrel prices that we haven't seen for a substantial period of time and aren't going to see in the short- to medium-term.
