XLE trade ideas
Oil Prices Will Determine Where The Stock Market Goes From HereWhile the stock market continues to march higher, economic fundamentals continue to deteriorate. Forward-looking in nature, the stock market tends to discount (ignore) what is happening now in anticipation of what is to come over the next 6-9 months. Although top-down stimulus from central banks and governments have propped up financial markets, economic data points across the globe are signaling a prolonged downturn. For the first time in modern history (BP started keeping recording in 1861), WTI oil prices traded into negative territory reaching $-36.20 per barrel. In essence, storage facilities were giving away oil because they had no more room to store it. Oil markets have been telling us what is truly going on. But are investors listening?
Two weeks ago, OPEC+ decided to cut oil production by approximately 9.7 million barrels per day starting in May. Since that time, energy prices have been extremely volatile, falling further. Why did oil prices continue to fall despite the cut in supply? Lack of demand. Despite the fact that OPEC+ vowed to cut global supply by 10%, the gap between supply and demand has grown. Since the coronavirus accelerated, global demand for oil has fallen by 30%, leaving a 20% (20 million barrels per day) gap after accounting for OPEC+ cuts that start next month.
The lack of demand has been widespread. According to Rystad Energy AS and the Trafigura Group, energy demand is expected to fall by 28-35 million barrels per day. U.S. oil demand has fallen 30% to 14.4 million barrels a day, the lowest level going back to 1990. In its short-term outlook, the EIA forecasts the hit to oil demand will be 16.7 million barrels a day. According to country officials, India’s crude demand (third-biggest consumer) has collapsed by ~70% as the country endures the largest national lockdown. Canadian oil producers expect the gap between supply and demand to reach more than 1.1 million barrels a day in the second quarter. In Spain, oil product demand fell by 23% in March. With gasoline and road diesel falling by 35.5% and 26.5% respectively. In Italy, which together with Spain imposed some of Europe’s harshest restrictions on movement, retail fuel sales have plunged 85%.
The relationship between the S&P 500 and oil prices has strengthened over the last six weeks. The correlation (relationship) stood at .07 (statistically insignificant) in the middle of February, that figure now stands at .86 (statistically significant). Assuming there are no sizable policy stimulus that distorts prices further, I expect oil prices to dictate where the stock prices go from here. Oil price increases driven by short-term reductions in supply will not be enough. Globally, oil makes up 34% of our energy usage. Only an increase in demand will signal a genuine economic recovery. At some point, the stock market and economic fundamentals will need to be reconciled.
-Appo Agbamu, CFA
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XLE at .5 retraceXLE sitting comfortably at 39.55 at time of this post.
This marks the gap fill we have been looking for, and a touching of the 50% retrace mark from February. HUGELY over bought right now, so i would assume some pull back here. States are starting to open up and we have some positive news on the Drug side of things.
Comfortable staying long in this right now. Hold my Fall Call options at $55 already up 150% from when they were bought.
XLE hitting long term resistance.XLE looks like hitting long term resistance. a break above the 38.3/4 level could signal much higher prices to test bottom of previous support
Wedge Broken UPAscending wedge broken to the high side in pre market trading. Up above 37 as of now. Gilead reporting positive data on COVID drugs. Could be a positive day for most today.
Holding Fall Call options on XLE.. although we will see where the price is this morning and could dump with healthy profits..
XLE Trending in the right directionStill feeling very positive about XLE..
Targeting 39 to fill the upper gap, but need to get through 36 in a strong way to make that happen.
CVX looks like it has taken full advantage of this recent bounce while XOM seems to be stuck..
Not sure how much more room CVX has to grow right now given the current oil markets, But XOM could make up the difference.
Time will tell on this one. Sitting on Fall Call Options right now for basically nothing..
XLE could see a pullback through Sept-OctXLE could see a pullback through Sept-Oct but looks like limited upside before further drop. key resistance looks to be in 40-42.50 area. Resistance at this level and further downside later in year.
The 100 tick renko looks like price does have upside potential in short term.
Trading Ideas: Potential Oil Bottom In SightA price bottom may have arrived for oil and oil stocks ($XLE).
Chart displayed a bullish divergence of the MACD and has traded with some strength on the rebound.
A potential cup and handle reversal pattern is forming and will be validated if price can trade above the gap resistance with considerable volume.
We are currently neutral on oil.
XLE Breaks 34XLE broke $34 ceiling in premarket trading.. Needs to hold this level in order to continue up to our $36 target.. Oil seems to be stablizing a bit for now..
Bounced nicely off .618 Fib level from recent high. now above the .236 level..
Creeping into overbought territory on 30min charts. Could see a pull back in the open but should be another 3-4%gainer today.
XLE - Energy sector SPDR S/R levelsHello traders,
Description of the analysis:
Everyone sees an opportunity in the oil market. Personally, I would not invest in this commodity. There is a surplus of oil, there is no place to store it and no one wants it. It can't stop mining. But investing in the entire XLE energy sector could be interesting. Here are the main S/R zones where the price could react. Everyone makes their own point of view.
About me:
Hi, my name is Jacob Kovarik and I´m trading on stock exchange since 2008. I started with a capital of 3000 USD. My first strategy was based on OTM options. (American stock index and their ETF ). I´ve learnt on my path that professional trading is based on two main fundaments which have to complement each other, to make a bussiness attitude profitable. I´ve tried a lot of techniques and many manners how to analyze the market. From basic technical analysis to fundamental analysis of single title. My analytics gradually changed into professional attitude. I work with logical advantages of stock exchange (return of value back to average, volume , expected volatility , advantage of high stop-loss, the breakdown of time in options, statistics and cosistent thorough control of risk). At the moment, my main target is ITM on SPM index. Biggest part of my current bussiness activity comes from e mini futures (NQ, ES). I´m trader of positions. I´m from Czech republic and I take care of a private fund (4 000 000 USD). During my career I´ve earned a lot of valuable experience, such as functionality of strategies and what is more important, control of emotions. Professional trading is, in my opinion, certain kind of mental training and if we are able to control our emotions, accomplishment will show up. I will share with you my analysis and trades on my profile. I wish to all of you successul trades.
Jacob
XLE compI'd think it dumps soon to catch up with crude (blue line). Not a forecast, just observing a comp.
Loading up on more call options todayOkay so we gapped down last night. Obviously Energy sectors are in panic mode. Do you guys really think it will stay here forever??? Hell no.. AS of now we still havent even broken the trend line up even with the gap down. Thinking maybe a short term Put option, but going to be loading up on long term calls here, only going to be cheaper than they were yesterday!
We've got a decent support between 31-30.
Still playing this long over the next few months. Short maybe this week.
September and later Call options are DIRT Cheap...
XLE HAS MORE BLOOD TO SPILLThe channel was gapped down and broken and it's about to hit a resistance level coming back in the channel and negative oil contract isn't helping. Bought puts yesterday afternoon 32 strikes in late MAY.
No brainerBuying More call options today on this drop.. Get them now while they are cheap. These prices wont last forever. Adding to my September calls now. If you've got $200 you can live with losing, it should be put here IMO. upside is huge.
ONLY TRADE WITH MONEY YOU CAN LIVE WITHOUT, IF YOU ARE NOT A FULL TIME PROFESSIONAL TRADER.
I am not a professional trader, i work a day job. But i play with money i can lose. dont be stupid.
Market Outlook & Trading StrategiesAn in-depth comparison in relative strength of various US sectors from peak to trough, complementary to previous post.
It appears that investors have repositioned in recent recovery with a "lockdown" theme, weighting heavier in their investments with healthcare ($XLV), fundamentally strong tech ($XLK) (e.g. $AMZN) and consumer staples ($XLP) (e.g. $WMT).
We are still in favour of stock picking/sector ETFs which should outperform buying into the index.
Nice bounce off the .23 FIBThinking weve got a chance to fill a gap here. Gotta bust through $35 to make it happen. Could take a week or so.
Bought $55 Calls For $0.04 today on a 9/30 exp. Seems like an easy move. Low risk fairly high reward
Oil has tested it's $20 support 3 times in the last monthYou can try to short oil but there is much more upside by going long.
I picked up 122 $55 XLE calls today for .03 each
Not a whole lot to lose and a whole lot to gain. Oil isn't going away like some people think. Way too many industries are reliant upon it and way too many people will lose money if it stays at these prices.
It might not be very soon but there is room for it to rise in the next 6 months.
Should return to the middle channel by August.Collect dividends while you wait for a return to the mid channel which I am predicting to be in August.
XLE (Energy Sector)Providing we don’t make any lower lows on the weekly time frame and preferably stay above resistance, last seen in August 2004, this could potentially be the place to buy and hold for the medium to long term.
The next level to watch out for to the upside comes in at 37.71, stronger resistance at 41.47 closing the gap. Above that 48.11 then 38.2 fib level at 52.94.
