My Screens Show Plenty Of Shorts In This Area. Here’s One Of Them
As
much as I like the Oil & Gas group, I am finding it extremely
difficult to embrace them today for new long positions (for swing trading
purposes). In fact, I’ve been getting plenty of charts popping up on my screen
for shorts in this space. Let’s look at one we found today in ConocoPhillips
(COP). Let’s play Good COP — Bad COP.
Bad COP Scenario:
For two years COP has been in a nice uptrend and is now trading at the top of
it’s 2 standard deviation regression channel. See the weekly chart below
If you drill down to the daily
chart from October 2004 to today, you’ll find a few bearish patterns. First is
the “3 Drives to a Top†pattern, and the other one, I discuss in my book is a
Shark Attack pattern. Many retail players are getting sucked into this oil & gas
story as companies announce earnings (ie. XOM and DVN the last few days) As
price pushes up to new highs shorts are getting covered and anxious longs that
think they are missing the boat are swarming in. This is where the shark is
coming up out of the water to take a big bite out of these “weak handsâ€. Once
this players have made there noise, the stock/shark dives back down into the
water (translation: price falls).
Good COP Scenario:
I don’t have one.
Good night!
Derrik