Want to beat the sector that’s working? Be in the stocks that are working. Here’s your trade on the XOP. (June 13, 2016)
XOP USO XOIL.X USO XOP HFC XOP HFC ALIF ALJ XOP ALJ HFC WNR XOP MPC XOP MPC WNR CVI VLO TSO DVN OAS XOP OAS HFC DVN OAS VLO
Okay, XOP ( NYSEARCA:XOP ). I want to talk about the prerequisites of buying stocks when you’re looking at sectors, and this is pretty easy. I’m going to show you, in this video, what NOT to do. First of all, the XOP ( NYSEARCA:XOP ), we look at oil ( NYSEARCA:USO ), it’s been trending higher, which ever one you want to look at here ( XOIL.X ), so this has been trending higher ( NYSEARCA:USO ). And the XOP ( NYSEARCA:XOP ) has been trending higher. It’s one of those things that you want to kind of want to buy on dips, a little bit like now. So I was looking through the various stocks that are in the XOP ( NYSEARCA:XOP ), and a lot of times, just depending on what I’m looking for, I do it in different ways. One of the ways I’ll look at is, what are the biggest gainers today? If I look at a sector like this that is maybe close to support. Because I’m thinking this might hold, maybe we’re going to get a trendline here.
So what are the stocks that are strongest, on the day, that I think there’s a chance (I’m using wiggle room here because I’m a trader, I’m not a fortune teller) that this is going to be a buying opportunity. Yes, I hear all the news about oil and this and that but I care more about the price action, not what some chucklehead on TV is talking about, oil and energy, and energy stocks. I really don’t. I care more about what the price is doing. It’s called leveraging the collective wisdom of the crowd, as opposed to watching one guy who happens to be on TV. So I’m looking at this and I’m looking for the strongest stocks. Other times I will look at like the WEAKEST stocks. So today though, I turned it on it’s head because I wanted to, to really show you what NOT do. Look at these stocks. These are the WORST performers today. What do you see about this ( NYSE:HFC ), other than a big 8 percent decline, what do you see about this ( NYSE:HFC ) that is different than this XOP ( NYSEARCA:XOP )? Okay, I won’t make you guess. THIS is in an uptrend.
Generally speaking, higher highs, higher lows, we can go break this down with various patterns, squeeze patterns, and all that. We can do that, it doesn’t matter. The bottom line is, this is trending higher. This is the way the XOP ( NYSEARCA:XOP ) has been going. Yet HFC ( NYSE:HFC ) has been doing just about the opposite. So you look at the volume here, this thing has been trading millions of shares. For every share that’s sold somebody is buying that share. My suggestion is, that it not be you. Don’t look at stuff like this and think, “Oh, well this is where I’ve got to be, because it’s cheaper.” These stocks ( OTCMKTS:ALIF ) just get cheaper still.
Another one ( NYSE:ALJ ). Do you really want to be buying this? Again, you look at the way the XOP ( NYSEARCA:XOP ) has been trading, it’s been drifting up here. And then at the same time this stock ( NYSE:ALJ ) has been trending down. This ( NYSE:HFC ) has been trending down.
Western Refining ( NYSE:WNR ). Fine company. It’s been, maybe not trending down because it actually looks like it’s been consolidating. But doesn’t it look like it was consolidating here, and here? This looked like a nice consolidation. And here, hey look, poised for a breakout. None of these things have been working along with the XOP ( NYSEARCA:XOP ) though, which has been doing the opposite. So we look at Marathon Petroleum ( NYSE:MPC ), same deal. This is a few days ago, right? So we move out here, you can see again, NO TREND. This is a trend, XOP ( NYSEARCA:XOP ), it has actually kind of got the earmarks of a NEW uptrend. We don’t know how high this is going. We just know that 34.97 is higher than 33.00, which is where the moving averages cross the 50 and the 200, somewhere around there. If you want to be long, and you can’t figure it out, be long the XOP ( NYSEARCA:XOP ). The problem is, Marathon Oil ( NYSE:MPC ), Western Refining ( NYSE:WNR ), are in the XOP ( NYSEARCA:XOP ).
So is CVR ( NYSE:CVI ). Valero ( NYSE:VLO ), Tesoro ( NYSE:VLO ). These are all names that you know.
Tesoro ( NYSE:VLO ), Valero ( NYSE:VLO ), Marathon ( NYSE:MPC ), Western Refining ( NYSE:WNR ), Holly ( NYSE:HFC ). All of these are names that you know. None of these are names that you want to own. You want to own stuff like Devon ( NYSE:DVN ), Oasis Petroleum ( NYSE:DVN ), stuff like that. I could go through a whole list of them, but I’m not going to. What I want to emphasize to you is this: When you are looking at sectors and you’re looking for themes, which is what you need to be doing now, or just be an intense stock picker; because there just are not that many things to do ahead of the Feds decision that they’re not going to raise rates. But they will remain vigilant, and generally speaking they’re optimistic that the economy is going to improve.
But with so much uncertainty ahead of them they’re unable to really justify doing anything now. “But markets don’t get to complacent, because we could go off at any time.” After they issue THAT statement then they will be worrying about Brexit. What I’m saying is, when you are looking at a sector that is probably going to ride through all that, and energy stocks, for the most part, don’t really care what monetary policy is, other than how it impacts the dollar. When you’re looking at that, find stuff that mimics what the sector ( NYSEARCA:XOP ) is doing. Look at this trend. Look at the 50 and the 200-day moving average. Look at these prices, this is the type of thing that mimics the trend ( NYSE:OAS ). This is the type of thing ( NYSE:HFC ) that doesn’t. But they’re both in the same sector. I hope this helps. You want to stick with that stuff ( NYSE:DVN ) and that stuff ( NYSE:OAS ). Not that stuff ( NYSE:VLO ).
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