Currently I’m searching for an entry point on a medium term trade in energy [XLE]. The trend is UP, so let’s ride along.
The following are the top energy stocks versus the bottom energy stocks trading on the spider in a 3-month. Try to view the sector as a continuous flow of water, with the entire sector rising. You’ll get a nice “bell-curve” if you plot this on a chart.
A closer look though reveals that over a shorter period we see spikes in some of the underperforming stocks, especially CHK
CHK trades within a 5-8 channel after breaking its $4 floor. Naturally profits were taken in May after a major run, but trying to observe the trader’s psychology, I feel there’s a little sense of anxiety for traders to hold the stock long which is usually a good sign to buy the dips. Furthermore, the shorting on this stock is quite high which I assume is the cause for the stock to rise from $5 to its peak at $8 from Aug-Sep. Next squeeze is building up.
Looking to get in long between the 5.50 – 5:70 range or cheaper.