Energy captured our attention a couple weeks earlier, as the indices continued to forge higher prices and energy consolidated below a break out level. Readers and members of our trading room know we’ve been watching and taking positions in energy stocks over the past couple of weeks. The weekly chart of XLE depicts increasing interest in the shares that trade therein; oil and exploration scored very high in performance over the past two weeks.
Considering the strength in energy, we ran a scan this morning to fetch a few more candidates. Several stocks that we’ve been watching populated the scan. WLL, HFC and RIG are the standouts, along with PDS.
We took a position in Holly Frontier (HFC) recently. You might recall that Mikey (heart pumper) posted a chart in the room, that caught our attention. Over the past week HFC pulled back to support, apparently finding buyers in the process.
The company is trading post earnings, with technical indicators suggesting higher prices. HFC pushed above the 200ma two weeks ago and in the process sent its 9/20ema higher. These two are now in bullish configuration, with the 9 above the 20 and price above all three moving averages. RSI, STO and MACD are rising. Stops under the 200ma for now.
PDS is also trading post earnings. We have similar thoughts for this candidate, as price action bolted above the VBP resistance thats marked its base for much of 2016. There is little overhead supply now that we have started to change trends, with MACD, STO and RSI suggesting follow through is in order. A pullback into previous price action would be an ideal entry with stops around 4.80.
We also initiated a position in RIG yesterday. We have a wide stop and look at this position with a more long term perspective, assuming the stock continues to perform as planned. We are watching the weekly chart. We would anticipate RIG will back and fill along the way, so there will be plenty of opportunities to get on board. The 200ma is our longer term target, around 24.00 (+/-), so it will likely take several months to get there.
Do not chase these energy stocks; instead look at more candidates in proper setups, that have recently reported earnings, that have yet to break out. It’s part of the process to do your own homework, so get to it! If you have a copy of my eBook, use the scans therein to find your next potential winners.
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